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T his is one of the most im- 
poi'taiit autobiographies of the 
post-war period, for there can be 
few personalities still alive who 
have been so intimately connected 
with the march of world events for 
so many years as jdorace Greeley 
i jH^almar Schacht. Here is a man who 
j in his youth brushed shoulders with 
Bismarck, who throughout his life 
I has held positions of supreme finan- 
f cial authority, and who, two years , 

{ ago, at the age of 76, embarked 
I upon an entirely new career as a 
} private banker, with the object of 
j earning his own living. 

I In these pages he tells, with a dry | 
I humour often missing from the ] 
I autobiographies of the famous, a } 
fascinating story of a life devoted to 
the rise and fall of governments and 
the economic wizardry required to 
I keep them solvent, f'or he was the 
I inventor of the "controlled econ- 
<jmy” which regtilates all our lives 
today, and Keynes was his acknow- 
ledged pupil. His first great tritimph; 
was to rescue the (Jernum Mark; 
from the Intlatiou of u)2i, and it 
was at this stage that he met the 
legcndaiy and elusive Montagu 
Nornum, and formed a friendship} 
that lasted >intil the latter’s death.! 
It was at this time, too, that hef 
reigned iiitcniiiUcully as I'rcsidcnti 
of the Reichshank, for he was a man ; 
of very strong ]iolitieal opinions and 
more than once resigned tlii.s, as 
well as his other ministerial posts 
under the Weimar Republic. 

There had been a time when , 
Schacht founded his own "German j- 
Democratic Party", hut in the stre.s8 
of world events he changed his 
political allegiance, moved ffirther 


to the Right and, as the Nazi ava- 
lanche swelled, allowed Hitler to 
persuade him to join the Govern^ 
ment and occupy once again th^c 
Presidential chair at the Reichs- 
bank. It was Schacht who intro- 
duced some order and system into ( 
Hitler’s erratic financing of the 
Third Reich, but his clear mind 
soon began to see that the Fiihrer 
was driving relentlessly towards 
war. A quarrel ensued and he left 
the Government, remaining under 
a cloud until he was finally arrested 
towards the close of the regime. It 
was actually from one of Hitler’s 
gaols that he was liberated by the 
Allied armies, only to be rc-arrested , 
and put on trial for his life as a war 
criminal at Nuremberg. He was, of 
course, one of the three to be ac- 
quitted, but it was still several years 
before he was finally cleared by the 
courts of his own countrymen, and 
thus acquired the freedom and 
peace of mind which have enabled 
him to write this momentous book. 





A My First Seventy-Six Years 





The Autobiography of 

HJALMAR SCHACHT 

Translated by 
DIANA PYKE 



LONDON 

ALLAN WINGATE 



Copyright tgjj by 

ALLAN mNGATE {Publishers) LTD. 
tz Beauchamp Place, London, S.W. J. 


Printed in Great Britain by 
SpoUismode, Ballantyne and Company Limited 
London and Colchester 


Darga Sat, 

NyllNlTAL. 

Class No. 

Book No. 

Received on .... P..S.C 

ACKNOWLEDGMENT 

The Translator and PublUhera desire to express 
tlieir cordial thanlcs to The Institute of Bankers 
Library, and especially to Mr. G. E. Assinder of 
Barclays Bank Group Office, London, for in- 
valuable help with the technical side of this book. 



CONTENTS 


page 


Introduction i 

YOUTH 

CHAPTER 

ONE The Schachts and the Eggers lo 

TWO Three Towns beginning with “H” *3 

THREE Three Emperors in One Year 36 

FOUR Cholera in Hatiiburg 48 

FIVE A Meeting with Bismarck 57 

SIX At the University 6a 

SEVEN An Unpaid Assistant on the Kleines Journal 70 

EIGHT Paris at the Turn of the Century 76 

NINE Doctor of PhOosopky 81 

THE UPWARD ROAD 
TEN Commercial Treaties 90 

ELEVEN I meet some of the Big Bankers 97 

TWELVE The Dresdner Bank 10a 

THIRTEEN The Near East iia 

FOURTEEN My Family rt8 

FIFTEEN Gerniafiy’s Turmr^-Point 133 

SIXTEEN The First World War 130 

SEVENTEEN Director of the Batik 139 

PUBLIC SERVICE 

EIGHTEEN The Founding of a Party 148 

NINETEEN Member of the Workers’ and Soldiers' Council 155 

TWENTY Inflation 163 

TWENTY-ONE With the Danatbank 171 

TWENTY-TWO The Secret of the Stabilized Mark syi 

TWENTY-THREE President of the Reichsbank 188 

TWENTY-FOUR The Bank of England I94 

TWENTY-FIVE The Centre of Separatim aoi 

TWENTY-SIX Monsieur Poincari 307 

TWENTY-SEVEN A Painful Recovery 313 

FIGHTING REPARATIONS 
TWENTY-EIGHT The Reichsbank from the Inside 333 

TWENTY-NINE Some Economic After-Nffeets 337 

THIRTY Clouds on the Horizon 333 

THIRTY-ONE I Sign the Young Plan 340 



VI 


Contents 


THIRTY-TWO 

A Far-reachittg Idea 

page 

248 

THIRTY-THREE 

1 Resign from the Reichsbank 

256 

THIRTY-FOUR 

On nty Otm 

263 

THIRTY-FIVE 

The End of Reparations 

272 

THIRTY-SIX 

Meeting with Hitler 

278 

THIRTY-SEVEN 

The Dank Crisis 

284 

THIRTY-EIGHT 

The Harabnrg From 

290 

THIRTY-NINE 

UNDER HITLER 

President of the Reichsbaiik Again 

300 

FORTY 

Visit to Roosevelt 

307 

FORTY-ONE 

Conversion-Fund and Mefo-bills 

314 

FORTY-TWO 

A Stronghold of Justice 

321 

FORTY-THREE 

The Neu> Plan 

327 

FORTY-FOUR 

Medrdy about Pictures 

33 S 

FORTY-FIVE 

At Odds with the Party 

342 

FORTY-SIX 

The KBrugsberg Speech 

349 

FORTY-SEVEN 

The Jewish Question and the Church Question 

353 

FORTY-EIGHT 

Rearmament \ 

362 

FORTY-NINE 

Hermann Goeritig 

367 

FIFTY 

Foreign Policy 

378 

FIFTY-ONE 

RESISTANCE 

1 Break with Hitler 

386 

FIFTY-TWO 

Indian Diary, xggp 

395 

FIFTY-THREE 

From an attempted Coup d’Etat to an attempted 



Assassination 

406 

FIFTY-FOUR 

Concentration Camps 

424 

ARRAIGNED BEFORE THE WORLD 


FIFTY-FIVE 

In American Hands 

442 

FIFTY-SIX 

Nidnherg Prism 

449 

FIFTY-SEVEN 

The Prisoners 

454 

FIFTY-EIGHT 

The Nihaiberg Tribunal — I 

462 

FIFTY-NINE 

The NSrnberg Tribunal — II 

481 

SIXTY 

The Denazification Tribunals 

S02 

LIFE BEGINS AT SEVENTY 


SIXTY-ONE 

Free Once More 

S16 

SIXTY-TWO 

Cfff to the Far East 

528 

SIXTY-THREE 

Under the Garuda 

536 

SIXTY-FOUR 

Finale 

546 

INDEX 

• 

559 



ILLUSTRATIONS 

THE AUTHOR, DURING HIS IMPRISONMENT OF POUR YEARS frmtispita 


facing page 


THE AUTHOR'S MATERNAL GRANDFATHER 32 

HIS PATERNAL GRANDFATHER 32 

HIS MOTHER 32 

HIS FATHER 22 

AS A STUDENT AT THE fOHANNBUM, HAMBURG, tSgs 23 

WITH HIS ELDEST DAUGHTER 23 

AT A BOARD MEETING OF THE REICHSBANK IN 1924 23 

AS GERMAN REPRESENTATIVE AT THE YOUNG CONFERENCE IN 

PARIS, jgag 120 

A SKIT ON THE AUTHOR'S DAILY ROUTINE AT THE YOUNG 

CONFERENCE 121 

"SCHACHT ENJOYS HIMSELF OR THE BATTLE OF THE BEANS" I2I 

AN HISTORIC MOMENT 121 

SAYING GOOD-BYE TO OWEN D. YOUNG AT THE GARB ST. LAZARB 152 

WITH HIS FIRST WIPE AND THEIR SON JENS 1S3 

ENTERING THE REICHSBANK 24* 

WITH MONTAGU NORMAN, GOVERNOR OF THE BANK OP ENGLAND 249 

SPECIAL GERMAN ENVOY TO PRESIDENT ROOSEVELT IN 1933 249 

WITH HITLER IN xg 34 280 

WITH MADAME PRANqOIS PONCBT AT THE OPENING OP THE GERMAN 

PAVILION AT THE PARIS EXHIBITION OP 1937 2S1 

THE LETTER INFORMING THE AUTHOR OF HIS DISMISSAL AS A 

MINISTER OP THE REICH, aiSD JANUARY 194.1 281 

THE "ETERNAL CIVILIAN" AT ARMY MANOIUVRES 281 

IN THE DOCK AT NORNBERG 376 

DURING HIS LATER IMPRISONMENT 376 

THE ACCUSED AT THE NORNBERO TRIAL 376 

WITH GENERAL NEGUIB IN 1933 377 

WITH HIS SECOND WIPE, AND FORMER PRIME MINISTER MIRZA 

ISMAEL OF HYDERABAD 377 

DR. MOSSADEQ RECEIVES THE AUTHOR IN BED AT THE CLIMAX OP 

THE ANGLO-IRANIAN OIL DISPUTE, 1933 377 

WRITING THIS BOOK 408 

WITH HIS SECOND WIPE AND THEIR TWO DAUGHTERS 408 

AT THE DOOR OP HIS NEW BANK IN DtfSSELDORP, xgss 409 




Introduction 

T he 2nd September 1948 was a particularly sultry day. 
Somewhat ill at ease in my fur coat I stood at the exit of 
Ludwigsburg Internment Camp waiting for the turnkey to 
come and open the door for me. My wife was waiting outside 
with my lawyer; plucky Manci, who for years had been fighting 
a desperate battle against every kind of obstruction, in order to 
have me released. Now, at last it had happened. She had come to 
fetch me in Dr. Schwamberger’s car. Now and again she would 
raise her hand and signal unobtrusively, which meant : “Only a few 
minutes more, and you’ll be free!” 

Seconds passed. Two young Press photographers had taken up 
their stand beside the gateway ready to record on their film my 
first step into freedom. I waited. The photographers grinned. 
They were obviously already looking forward to the caption; 
“Wearing a fur coat in a temperature of 77®, the former President 
of the Reichsbank is released from Ludwigsburg.” There would 
be no point in trying to explain to them about the coat. What did 
they know of four years’ imprisonment under the Gestapo, of 
American and German Denazification Tribunals? How could they 
tell the condition of the clothes I wore under that coat? 

A couple of workmen came by and, attracted by the interesting 
drama, stopped to light cigarettes. I could hear their conversation. 
“That’s Schacht,” said one. “They acquitted him yesterday.” 
“Think they’ll let him go ?” the other asked. He wore a pair, of 
blue dungarees, and from the waist up was clad only in his own 
sunburnt skin. 

“No,” said the first man slowly. “I don’t believe they will. 
They’ll find some reason or other to pop him back in jug!” 

They spat into their hands, picked up their tools and departed. 
Their talk could not be described as encouraging. Vox populij I 
thought. 

The turnkey arrived, rattled his keys and solemnly opened the 
great gate. The cameras clicked; someone asked me a question. 
Manci cut him short and led me to the car, I sank into the back seat 
next to the man who for months past had conducted my defence. 
“Let’s get away,” said Manci, “away from this place.” 



z 


Introduction 


I don’t know if it was that same evening or on one of those that 
followed that I decided to write my Memoirs, For the first time in 
four years, one month and ten days I was a free man. Ever since 
seven o’clock on the morning of the 23rd July 1944, when the 
Secret State Police had arrested me, I had been pushed around 
like a postal packet. Other people had assumed responsibility for 
my person, had transferred me from one prison to another by car, 
’plane and lorry; they had conducted me from my cell to the 
courts and back again to my cell; had threatened me, shouted at 
me, spoken me fair. Prison air is the same the world over. I had 


been imprisoned for conspiring against Hitler. After Hitler was 
dead, I was imprisoned for aiding him. Men who knew nothing of 
my country or of my personal ^circumstances had confronted me 
with ready-made judgments on my person and my country and had 
flung these judgments in my face. 

I was seventy-one years old and suddenly once more a free 
man. My wife and children were living in a kind of log hut on 
Liineburg Heath. I had lost ever5d:hing I possessed — money, 
house, land, even the wood I had once planted. 

Such a situation makes a man think. He begins to reflect on his 
future as well as his past life. I was not greatly concerned about the 
future. As a young man I had worked my way to the top ; I could 
do so a second time. In my family we mature late and remain 
active well into the biblical years. Such had been the case with my 
grandfather, a parish doctor in a small north-German town. The 
same had been true of my father, who as a young man had emi- 
grated to America, returned to Germany six years later and for a 

second time built his life anew. I could not do otherwise. No 

had no fear of the future. I would work, I would not fail the three 
people who depended on me. 

The past was a somewhat different matter. It may of course be 
argued that four years of prison, concentration camps, Inter- 
national Tribunals and Denazification Courts were ample for a 
man to come to terms with his past. That is a mistaken assumption. 
There IS no time during an enquiry for a man to come to terms 
with himseff. One is handed over, defenceless, to the relentless 
power of those ^thorities who, from the prison warder to the 
foremost Pubhe Prosecutor, never for an instant relax their grip 
Unswen^gly, unremittingly, they endeavour to catch you out, to 
pm you down, to prove something against you. You need to have 
pre^nce of mind, to be constantly on the gut mve if you are not to 
weaken. Exposed to every kind of mean trick and brow-beating, 
g^ted concessions one day only to have them withdrawn on the 
next, you are no longer a free subject but a target for the law. 



Introduction 


3 


This was the case, whether in the National-Socialist concentration 
camps, as ‘ ‘ war criminal ” in an American prison or in the camps of 
the Denazification Tribunals. Incur world, political tribunals aim 
at taking their victims by surprise. Serious thought is possible 
only for a free man. 

A few days after my release I went for a walk beside a stream in a 
wood. I love woods and water. On my former estate (now in 
Russian hands) there were woods, and lakes with waterfowl — 
herons, sawbills, divers, wild duck . . . 

The sun had set in a mighty turmoil of colour : tattered clouds of 
red, orange and yellow mirrored in the water. For some time I 
stood gazing at the scene, then sat down on a seat. 

“Aren’t you Dr. Schacht?” said a voice at my elbow. 

I looked up, startled. A man — a. complete stranger — had 
approached noiselessly and now sat down beside me. 

“Yes,” I said. 

He held out his hand. “I’m so very glad to meet you, Dr, 
Schacht,’’ he said. “ I have always wanted to shake hands with you.’’ 

We shook hands. “What can I do for you?” I asked. 

“Nothing,” he said. “I just wanted the chance to talk with you. 
You’re a free man now, aren’t you?” 

“It looks like it”, I answered. 

He shifted to a more comfortable position, took out a cigar-case 
and handed it to me. 

“Won’t it be robbing you?” 

“Not a bit of it ! ” was his grandiose reply. “ Cigars are my busi- 
ness — ^been in the trade thirty-five years. Don’t you remember 
me?” 

“ I haven’t the faintest . . 

“ I came to see you once ... at that time I was travelling for a 
cigar factory. I’m on my own now, thank goodness. Business is 
good, people are buying again since the introduction of the 
D-Mark.” 

“You came to see me?” 

“I was going to tell you about that.” He handed me a match. 
“ I called on you at the Reichsbank. My firm wanted to name a new 
brand of cigars after you. ‘The Hjalroar Schacht Cigar, President 
brand*, ha-ha-ha!” 

His laughter stirred my memory. “I remember,” I said, “but 
I couldn’t recall your face. You called on me and wanted to pay 
for the use of my name ? ” 

“Right,” he said. “And it would have been a good stroke of 
business for you too. A box of cigars ‘on the house* every week 
as long as you lived.” 



4 


Introduction 


“Is the firm still in business?” 

“And how! It’s going full steam ahead”, cried the cheery cigar- 
merchant. 

“Pity I turned the offer down”, I ventured, for the sake of 
saying something. 

“Yes, isn’t it?” he retorted. 

We smoked side by side for another quarter of an hour, then he 
rose, shook me long and warmly by the hand, and departed. 
/‘Poor devil,” his expression said “what have you got now? The 
Reichsbank is kapuU the Reich is kaput, the President deposed. 
They’ve no further use for a President of the Reichsbank these 
days. Look at me — I’m only a cigar merchant, but Tm the owner 
of a business and that’s better than a Reichsbank. If you had only 
agreed to let those cigars be named after you, you would now be 
receiving a free box every week,” 

That is what he would have said. I threw away the remainder 
of his cigar and closed my eyes. The encounter had jolted me out 
of the present — way back into a past which I found difficult to 
think about again. 

True, my past had been referred to often enough in NUmberg, 
Stuttgart and Ludwigsburg; they had endeavoured to furnish 
documentary proof, so to speak, of every step in my life. But was it 
the past that had been conjured up there— was it really the actual 
living past? In Niirnberg and in the Denazification Courts my 
accusers had submitted documents which they believed covered 
my past history down to the remotest detail. The defence and 
witnesses had for their part submitted other documents containing 
entirely contradictory information. Men with whom, in the course 
of my public fife, 1 had engaged in sharp but objective controversy 
now appeared and testified on my behalf. Friends such as, for 
instance. Bishop Wurm, came forward; he was concerned in an 
action that had been brought against me and ostentatiously shook 
hands with a witness who had spoken in my defence. Nevertheless, 
the evidence of witnesses was just so much dead stuff, so much 
legal matenal set down on four-folio Form No. DIN. A. Not one 
of those sheets of paper — whether used for or against me — was 
me real past but merely a bit of it, tom from its context, and 
therefore dead. 


I thought of Ae seventy-odd years during which I had con- 
sciously lived. How much had ^ppened during those seventy 


M German Empire was seven 

years old. Bismarck was ChanceUor; the Hanseatic city of Ham- 
burg was still ouMe the German Customs Union. When I was 



Introduction 


5 

eleven, Germany had thi-ee emperors in one year; Wilhelm I, 
the Emperor Frederick, and Wilhelm II. Germany was a country 
of aspirations, year by year her power increased. As a student in 
Kiel I had witnessed the building-up of our Fleet and the terrify- 
ing iron shapes of the new armoured .cruisers and battleships. 
When I married, three years after the turn of the century, Germany 
seemed at the height of her power. The old Bismarckian system of 
alliances still held. No one dreamed that behind Germany’s 
steady, continued ascent as a new colonial power there lurked the 
hideous menace of a World War. Surely it would be presumptuous 
to think of attacking this new Germany? Were not we — ^the late- 
comers among the peoples of Europe — in a fair way to catch up 
with the rest ? 

It seemed so at that time. No one bothered about the future. 
Yet the peaceful dream of my married life lasted only eleven 
years ; then came the war, and four years later the first collapse. 
I was forty-one years old and manager of a bank when the Ger- 
mans came pouring back to the Reich, embittered, starving, ripe 
for revolution. But the revolution did not materialize, or did so 
merely in disconnected fashion. The Emperor departed, the troops 
were disarmed. In place of the Emperor, Germany had a President 
of the Reich and a Cabinet of party Ministers. But the political 
change could not blind us to the fact that we were ruined. The 
impoverishment of our people, the drop in the value of the mark 
continued their irresistible course. The path we trod after the 
first world war was marked by such milestones as the hunger 
blockade, dictated peace, inflation. Almost exactly five years after 
the collapse of Germany I was drawn into politics, from which I 
have never since been able to escape. 

I was forty-six years old when in 1923 the Government offered 
me the post of Commissioner for National Currency, followed 
shortly by that of President of the Reichsbank, an appointment 
bestowed upon me by President Ebert; I accepted the appoint- 
ment, and stabilized the mark. 

My first wife, Luise, had presented me with two children, a 
daughter, aged twenty at the time of my appointment as President 
of the Reichsbank, and a son seven years younger. Three years 
after my nomination I spent Christmas with my family in Laus- 
anne. As usual we had decorated a Christmas tree and lighted the 
candles ; the children had been called into the room and stood side 
by side while Luise read the Christmas story from the New Testa- 
ment, My thoughts travelled to Germany. There, for the first time 
in years, thousands of families were experiencing, something like 
peace and security, People who worked received money with which 



6 


Introduction 


they were able to buy goods, money which would be worth the same 
tomorrow as it was today. In my pocket was a letter written in bad 
German from a steward on a sleeping-car. “ Dear Doctor Schachl, 
for the first time for years we have been able to put some presents 
under the Christmas tree and we have you alone to thank for that. 
When my daughter Miekc came home yesterday she was humming 
‘Who was it stabilized the mark, why no one else but Doctor 
Schacht’*, and I thought I would let you know and hope it will give 
you pleasure. Yours truly ...” I had received many such letters. 
People had often spoken to me on the street and shaken me by the 
hand — people personally unknown to me who were thankful and 
full of hope for a future with stable currency. 

All this I saw again in my mind’s eye as I sat on the seat that 
evening. I tried to conjure up the real past. Did anyone men- 
tion these things during my questionings by the Gestapo? Or 
remember them at Niirnberg and Ludwigsburg? Yes, they had 
done so. But I had the impression that none of my accusers had 
any conception of what had happened in Germany at that time. 
They had made up their minds already — determined to think the 
worst of me. 

In my ears there re-echoed the prison noises, the questions 
fired at me by judges, defenders, prosecutors; “What did you 
. . , ? Why did you . . . ? How did it happen that at such and 
such a time you . . .?” Incessant, unending! 

Life had not stood still when the German mark was stabilized. 
Only a few years later I was, in the eyes of many of my former 
friends, the best-hated man in the country who deserved to be 
shot out of hand. “The destroyer of German economy. The 
black-coated capitalist. The abhorred friend of the Jews. The 
corrupt National-Socialist” — ^frequently all together and in a 
hopeless jumble. 

I rose from the seat and went back to my wife in our temporary 
abode, Manci (whom I married in 1941) looked at me enquiringly. 

“What have you been doing?” she asked. 

“I’ve been sitting on a seat — thinking.” 

“What about?” 

“About the past. Memories cropped up of their own accord,” 

“What sort of memories?” 

“Memories of the past. The collapse of the Weimar Republic 
— ^Hitler — ^my second term as President of the Reichsbank — my 
work as Minister of Econonuc Affairs,” 

“What started you thinking about all that?” 

• “ hat die Mark stabilgemacht, das warallein der Doktar Schacht. ’ 



Introduction 


7 

“Because I’m dissatisfied; because I have the feeling that the 
entire judicial procedure to which I was subjected during the past 
four years only served to conceal the true facts. Isn’t that queer? 
For four years it has been nothing but talk, and going through 
documents, taking down evidence, hearing witnesses, contesting 
judgments, taking Counsel’s opinion — and what is the result?" 

“You have been acquitted,” she said. 

“That’s one aspect of it,” I conceded. “I have been acquitted. 
I have never doubted that one day I would have to be acquitted. 
But when I think back over all the things that were brought up for 
and against me during those yearn, then ...” 

“Then what?” she asked. 

“Then I would like to sit down and put on paper the true 
history of that epoch. The history of my epoch as I experienced 
it — ^not as an American or Russian accuser sees it — ^nor as one of the 
defence sees it. They have only one object in view — ^they want to 
see a prisoner condemned or acquitted. I don’t want to be one 
or the other. I want to speak freely of those things about which 
people still keep silence — even today.” 

“Well — why don’t you?” she asked. 

All this happened at the beginning of September 1948, immedi- 
ately after my release by the Denazification Tribunal, who, in the 
beginning, had sentenced me to eight years’ penal servitude. Since 
that evening ray thoughts had been busy with past events — ^in so far 
as time pei-mitted. My first task, of course, was to find some means 
of supporting my family — ^my wife and the two little daughters 
who were slowly growing accustomed to the sight of their father. 
My daughter by my first marriage is independent; but my son 
Jens, at the age of thirty-five, had been slain by the Russians be- 
cause (so one of his comrades told me) he had collapsed during the 
death-march on the way to prison. 

In the meantime I have written two books, Account Settled* 
and Gold for Europe,^ Both take a definite stand in regard to 
definite problems, or deal AAuth certain chapters of my life. 

The present book is somewhat different. It contains the thoughts 
of an old man of seventy-six on the subject of his own epoch. I 
myself have played my part and have endeavoured to influence 
this epoch. I have often been called a wizard — ^let this then be the 
memoirs of a wizard. There is nothing in my past of which I need 
be ashamed. Every human being brings to his life certain inborn 

* Abrechmmg mit Hitler. 
f Mehr Geld, mehr Kapital, tnehr ArheitJ 



8 


Introduction 


characteristics. He can — as the Scriptures tell us — ^put his talent 
to usury, and he can bury it. I was at pains to place my gifts at the 
disposal of the nation to which I belong. 

In addition, I am constrained by an urge which for as long as I 
can remember has been an integral part of all my actions. T would 
like to join my voice to those who seek to dispel the poisonous 
miasma that clouds our era. Terrible things have happened during 
my lifetime — even more terrible things can happen tomorrow if 
we refuse to learn from the past. 

But to be able to do that we must acquaint ourselves with the 
past, we must Icnow how these things originated, how they ripened 
in secret. Since November 1923 I have repeatedly raised my voice 
in protest against excessive luxury, against the defaming of an 
entire nation, against deliberate party influence, against the mad- 
ness of war. My writings and speeches have made me enemies; 
my life has been threatened; I have been attacked from many 
angles. But results have proved that I was right in my prophecies 
and warnings, and that those who attacked me were wrong. 

For this reason, I once again turn the pages of my life from the 
beginning. 



YOUTH 



CHAPTER ONE 


The Schachts and the Eggers 

A BANKER according to popular opinion, has an easy time 
of it. He sits in a bank and waits for people to come in and 
bring him money. Then he puts the money into profitable 
undertakings, pockets the profits at the end of the year and pays 
his customers some measly dividend. It’s the simplest calling in the 
world. Simple, and therefore unsocial. A doctor, they argue, a 
locksmith or a road-mender, they do real work. Bankers don’t work. 

I have known many bankers in my time. Some of them were lazy ; 
the majority however were very busy, highly intelligent men, indc- 
fatigably intent on extending their field of action. They had to, other- 
wise their banks would have paid no dividend at the end of the year. 

What the malcontents forget, however, is something quite 
different. No one thinks of asking where bankers come froml 
Do they grow on trees — or study in schools of banking— or do 
they belong to mysterious banliing dynasties? Yes— and no. 
Undoubtedly there were, and are, dynasties of banking families — 
the Mendelssohns, for instance, who, in addition to financiers, 
produced poets, musicians, artists and scientists. Others again 
come from the small, hardworking classes of our society — like that 
official of the German Reichsbank whose father had been a 
messenger in the same Institution. 

In a word, it is stupid to speak of “the banliers”. Anyone doing 
so puts himself on a level with those who think one can pass judg- 
ment on “the Jews”, “the Negroes”, “the railwaymen”. In 
every calling there are black sheep and white, and I shall have 
something to say of both. 

My own family was by no means well-to-do. When I was born 
my parents were poor, and many decades were to pass before my 
father felt he was stan^ng on firm ground. For as long as I can re- 
member my parents had to struggle with heavy financial problems 
that overshadowed my entire youth. 

For a long time I did not know what I wanted to be. I began by 
studying medicine, switched over to Qermanistics and finished 
up with political economy. I gained my doctorate with the 
faculty of philosophy. No fairies placed in my cradle the prophecy 
that I should one day become President of the Reichsbank. 



II 


The Schachts and the Eggers 

That would not have been possible in any case, for there was no 
such thing as a cradle in the Schacht home. On the contrary, when 
the midwife had taken possession of me, smacked my behind, 
bathed me and wrapped me in the linen set out for the purpose, I 
was popped into a “donkey” standing ready in my parents’ bed- 
room. A “donkey” is a wooden frame on trestles with a piece of 
sailcloth stretched between the two longwise staves. It was in this 
rickety contraption that I was laid by the midwife of TinglefF in 
North Schleswig on the 22nd January 1877. It had snowed in the 
night and my father had to get up at crack of dawn to clear a path 
for her and the doctor. 

He had married five years previously — ^in the Episcopal Church 
in New York, between Madison and Fifth Avenues. It had been 
an honest-to-goodness love match. My parents had first met 
in the little town of Tondern. At that time he was a student 
— ^not a very hopeful candidate for a middle-class marriage. But ' 
when he had passed his examination he took the bull by the 
horns and did what many Germans were doing in those days : he 
emigrated to America and was granted American citizenship on 
the iith December 1872. 

But he did not forget the girl in Tondern. When he had found 
a job in a German brewery in New York he wrote to her and 
suggested she should join him. 

My mother was twenty-one, my father twenty-six, when they 
married. It was a perfectly ordinaiy, middle-class marriage, though 
admittedly achieved under somewhat dramatic circumstances. 

My mother made the crossing to New York in one of those 
old-fashioned steamships still to be seen in old engravings. In the 
centre is a towering funnel; masts fore and aft; the top deck 
piled high with bales of goods ; below, a vast expanse of steerage 
deck which housed those unfortunate travellers not possessed of 
sufficient funds for a “cabin”. 

At the age of seventy-foxir my mother compiled an account of 
her adventurous journey. Nothing illustrates more clearly the 
tremendous changes that have taken place in our world than a 
comparison between trips to America then and now. 

My mother, the youngest daughter of my grandparents, had 
just passed her twenty-first birthday when she received the 
summons from America. Her mother gave her consent to her 
joining her fianc(J, but only on condition that an elder brother 
should accompany her. Fortunately she had a whole crowd of 
elder brothers; and a loyal maidservant from Schleswig-Holstein 
was also allotted to her. The trunk containing her trousseau and 
linen also held the wedding dress of muslin trinuned with red 



iz My First Seventy-Six Years 

lace. In addition, she took with her a small myrtle tree from which 
she intended to gather her bridal wreath. 

Thus equipped, the three adventurers boarded the steamer 
Fratiklin at Copenhagen. The vessel belonged to a young shipping 
firm in Stettin whose ambition it was to establish an American line. 
But while still in Copenhagen the steamer was delayed for a fort- 
night owing to storms in the Baltic. And when tibe loading of 
provisions and coal was being hurriedly completed, a trimmer fell 
overboard between the ship and the pier, and it was impossible to 
rescue him. On top of everything they put to sea on Friday, the 
13th October. (This is the first of several “thirteenths” that were 
destined later to play a part in my life.) 

A storm in the Channel compelled the captain to go round by 
North Scotland, where the steamer ran into fog and lay for days 
in the Atlantic, scarcely moving, and with her fog-horn hooting 
mournfully. My mother and her brother shared the only first- 
class cabin with nine other passengers, including a teacher and the 
wife of a merchant with whom she made friends. The ship carried 
no second or third-class accommodation; on the other hand there 
were three hundred passengers on the steerage deck. 

During the entire journey the little myrtle tree remained safe 
and sound under a skylight, and blossomed and flourished in the 
sea air— a good omen for the end of this frightful voyage. 

Those on board very soon noticed that the cargo had been badly 
stowed. The ship lay aslant in the mighty North Atlantic breakers 
and rolled intolerably. In the second week it was found that not 
enough drinking-water had been taken aboard. By the Captain’s 
orders the steerage passengers were supplied with distilled sea- 
water instead of any of the available fresh water. As a result of the 
inadequate sanitaiyr conditions, cholera broke out on board; it 
spread with alarming rapidity and claimed in all thirty-five victims 
among the steerage passengers. Night after night those in the first 
class shuddered as they heard bodies being lowered into the sea, 
wrapped only in sheets owing to lack of timber for coffins. My 
mother suffered tortures of anxiety during this time, as her maid 
was one of the steerage passengers. 

When the tragedy was at its height the First Officer came to the 
cabin tmd begged for help for a six-year-old boy, son of a family of 
Jutland enugr^ts. Father, mother and his three brothera and 
sisters had died of cholera, and the boy’s clothes had been burned to 
prevent infection. My mother gave linen and wool from her dower- 
cbest; the women cabin-passengers made new clothes for the lad 
took mm into the cabin, where his friendly character did much 
to cheer the little company. 



The Schachts and the Eggers 13 

But their tribulations were not yet ended. The Franklin had 
not only “economized” in drinking-water — ^fuei too was running 
short. It became necessary to chop up the bunks in the steerage in 
order to heat the boilers. During the last weeks before their arrival 
in the New World all passengers were restricted to one wineglass- 
ful of water a day. When, findly, the machinery became faulty and 
the compass went wrong, the proud vessel Franklin of Stettin 
proceeded at random westwards, as did Columbus of old, on the 
way to discover the new Continent. 

They actually did so on the and December 1871 ; but the name 
of the port was not New York, U.S A., but Halifax, Canada. The 
passengers’ hopes were dashed by the harbour authorites who had 
no wish to introduce cholera into Canada. Whereupon rebellion 
broke out. When a boat made for land to collect fuel and provisions, 
one of the passengers leaped overboard, swam after the boat and 
succeeded in reaching land, where he regaled reporters with all the 
details of their nightmare voyage ; with the result that my father 
first learned of his fiancde’s ordeal through the Press. 

But even when the Franklin at last ran into New York from 
Halifax he was not able to welcome my mother. On the contrary, 
the New Yorkers were so terrified of the cholera ship that they 
threatened to fire on her if she did not remain as far as possible 
out in the roadstead. An old warship, the Hartford, took over the 
Franklin’s passengers and kept them in quarantine for three weeks. 
It was only through the good offices of a kindly harbour physician 
who had compassion on them that they were able to correspond 
with one another. 

My mother had to climb through a cabin window on board the 
Hartford. During the uncoinfort 5 )le transfer from one vessel to 
another she clung fast to the little myrtle tree which had suffered 
least of anyone or anything during the voyage. With her brother 
and the Schleswig maidservant she spent a lonely Christmas in the 
roadsteads of New York. The day before they were finally released 
from their otherwise very pleasant confinement in the Hartford, 
someone accidentally left the porthole open and the myrtle tree 
was frozen. So ray mother, like all American brides, had to wear 
orange-blossom instead of a myrtle wreath when she was married 
on the i4ffi January 187a. 

My parents remained another five years in the States, Then the 
pull of Germany proved too strong and my father decided to go 
back. His return to the old home was influenced probably by a 
variety of reasons. He had left Germany shortly before the Franco- 
Prussian War. By the time my mother joined him a change had 



My First Seventy-Six Years 

already come over the German scene. An Empire had arisen, and 
a rapid economic advance went hand in hand with it in the period 
that followed. Why should he remain in America when the old 
country suddenly offered so many possibilities? 

The matter left him no peace. It pursued him when he sat at the 
desk casting up accounts ; when he forgathered with other German 
emigrants at the club ; when he went to the Gennan Church on 
Sundays. Five long years. In the autumn of 1876 the thing got the 
better of him. He threw down his pen, gave in his notice, bought 
the tickets and travelled back to Germany with his family — now 
three in number — ^himself, my mother, and my eldest brother Eddy. 

Not that he had failed in America. It was sheer homesickness 
that drove him back. 

During the voyage my mother drew his attention to the fact 
that his family would shortly consist of four persons. To which he 
remarked — as all husbands probably do in such cases : 

“We’ll manage! Three or four — ^what’s it matter? We’ll find 
room somewhere I ’ ’ 

So I can truthfully say of myself that I am the offspring of two 
Continents, separated by three thousand miles of ocean. 

My full name— the Mayor of Tingleff in North Schleswig 
shook his head as he entered it in his register — is Horace Greeley 
Hjalmar Schacht. 

The Hjalmar I owe to my grandmother Eggers, who urged my 
father at the last minute to tack it on to Horace Greeley so that I 
might have at least one decent Christian name ! 

Because of these three names I have been taken alternately for 
an American or a Swede. In Germany I am better known as 
Hjalmar; my English friends usually called me Horace, During 
the period of the Resistance in Berlin my intimate friends, when 
they spoke of me, used the name “Horaz”* A popular newspaper 
in die nineteen-twenties purported to know better ; it declared that 
my real name was not Hjalmar Schacht but Chajim Schachtel, 
that I was a Jew from Moravia and — ^but I needn’t say more. In 
spite of my foreign Christian names, I am and remain a German. 

How my father hit upon these three curious names is soon told. 
During his seven years in the States he was not only managing 
clerk, bookkeeper and business-man, but he also took a keen 
interest in the public life of the U.S.A. which at that time was 
experiencing the results of the Civil War. He was a particularly 
enthusiastic admirer of a Democrat of sterling character, a candi- 

* Pronounced “Horahts”. 



The Schachts and the Eggers 1 5 

date for the Presidency and friend of Carl Schurz — Horace 
Greeley. This liberal-minded North American politician, whose 
memorial stands in New York, had founded the New York 
newspaper Tribune^ later to become the well-known New York 
Herald-Tribune. My father, who regarded Horace Greeley as a 
model, resolved that his next son should be named after his idol. 
The fact that he was no longer living in America at the time of that 
son’s baptism did not worry him in the least. 

Recently, at the age of seventy-five, I acted as adviser in financial 
matters to four countries of the Near and Far East in succession 
(Indonesia, Iran, Syria and Egypt). In this connection, theAmerican 
weekly I'ime published an article comparing me with an old country 
doctor prescribing for his patients the well-tried remedies of hard 
work, thrift and careful planning. Underneath the picture of 
myself standing between General Neguib and my wife, Time had 
written; “Go East, old man.” 

Many readers may not have completely understood the double 
meaning of this caption, which is a play on words. Seventy years 
previously an American politician had urged the young people who 
were frittering away their time in the Eastern seaports of New York 
and Boston to go out to Western America, to the broad open 
spaces that offered scope and big opportunities for courageous 
pioneers. His slogan, which became world-famous, ran: “Go 
West, young man.” The name of that politician was Horace 
Greeley. 

I do not know how many times my father met this great Demo- 
crat. Nor do I know why he did not follow that advice and go out 
to Western America instead of returning home. It certainly would 
not have been due to lack of courage. More probably it was the 
feeling that he was a German — ^that the re-conditioned Germany 
offered great opportunities — ^that he wanted his children to grow 
up in Germany. 

So — ^we came back. Perhaps my mother also exerted some 
pressure. When, later, she spoke of those five years she always 
added that the American climate had never suited her. The 
temperature of New York in summer does not agree with 
Northerners, 

Children seldom learn the motives that lead their parents to 
decide on this or that course of action. 

When I read that caption in Time I wondered suddenly what 
would have become of me if— during that winter before I was 
bom— my father had hit the Western instead of the Eastern trail ? 
Should I have taken up banking in America? Or should I have 
grown up on a farm in the Middle West and followed in the 



1 6 My First Seventy-Six Years 

footsteps of those countless German colonists who had settled as 
farmers and tillers of the soil in the New World? 

Perhaps a reader will laugh out loud at the idea of the President 
of the Reichsbank as a husbandman in Michigan! The idea is not 
so far-fetched as all that. All my forebears on my father’s side, 
down to the most recent generations, were peasants. 1 come from 
a Dithmarschen peasant family. 


Dithmarschen peasants are not real peasants. As an old chronicle 
has it: “A Dithmarscher thinks he’s a peasant? He’s much more 
like a country squire.” 

The Schacht family came originally from the Old Province 
opposite the Hanseatic city of Hamburg. In the beginning there- 
fore we belonged to the left bank of the Elbe. Then we crossed the 
river and went north to Friesland. 


One of my ancestors had twenty-four children by four wives 
and died at the age of a hundred and twenty. The family was 
vigorous, tough, and attached to the soil. There is not a Marschen 
peasant but clings to his bit of ground. 

Now and again I take down an old volume from my library 
containing a description of the life of these peasants, a chi-onicle 
full of references to the endless duel between man and ocean. 
The inhabitants of the Lower Marches were nicknamed “spade- 
peasants” who continued unremittingly to throw up dykes with 
their long spades (especially fashioned for use in heavy clay) in 
order to preserve their fields from Father Neptune’s greedy en- 
croachments. Theirs was not always a placid existence. Now and 
then there inight be a generation that was able to harvest peace- 
fully what it had sown — ^but the next generation was sure to experi- 
ence a spring fiood or a breach in the dyke ; mice gnawed through 
the walls ; change of moon and storms from the west would drive 
the North Sea right over the high-water mark. The volume briefly 
chronicles: The fanner and his family remained on tlie roof for a 
week; two women, three children, and seventeen head of live- 
stock were drowned. In the neighbouring village three families 
were drowned. ’ It was an endless battle, which produced a tad- 
^m, wary, tough people who — ^if they were not prematurely 
drowned -attained a ripe old age. Planning and foresight were 
necessary tf a rillage was to withstand disasters which in earlier 
times caused whole tribes to emigrate. 

«t TV want ? ” I sometimes asked myself in former years, 

Uo you imagine your ancestors had an easier time of it ? How often 
must It have happened that a seventy-year-old countryman had to 
stand and see children and grandchildren drovra, and his fields 



The Schachts and the Eggers 17 

turned into mud-covered, silted-up, useless land. He never would 
own himself beaten, but picked himself up and began again.” 

Yet another trait strikes me as typical of this heritage: you will 
find no outward signs of sentimentality in a North Friesian farm- 
house. The constant battle with the Marsch demands from the 
inhabitants the utmost self-control. Expressions of affection are 
rare; feelings are hidden rather than revealed. But to hide one’s 
feelings does not mean that one has no feelings to hide. 

I have been described in public as hard and callous, invariably 
by those who knew me only superficially. They simply could not 
conceive that a man outwardly as “buttoned-up” as I am can 
possess such a thing as a heart. I regret this impression, but am 
unable to change it. A man is not what he makes of himself — ^he 
carries with him the invisible heritage of a long line of forebears. 

The first to break with the tradition of agricultural work and 
large families was my great-grandfather. I don’t know why he left 
home: anyway, he went to Biisum and opened a general store. 
He became a Koopmann (a small shopkeeper), as they say in our 
part of the world. 

The countryside around Biisum is flat; fogs envelop the coast, 
gulls scold and scream above the sandbanks. The inhabitants 
are wheat-farmers, charcoal-burners, cattle-fanners. When a Jew 
turns up to buy cattle he is horrified: these Dithmarschen peasants 
are worse even than any Jewish cattle-trader — and he clears out as 
quickly as he can. And he is right. They may be slow, but they’re 
sharp-witted, sarcastic, and full of sound common sense, and they 
don’t let anyone do them down. 

My great-grandfather did so well with his business that he was 
able to send his only son, my grandfatlier, to college. My grand- 
father was the oldest Schacht known to me personally; he ended 
up as parish doctor in Friedrichstadt. He was a real, dyed-in-the- 
wool offspring of the Dithmarschen peasantry with blue eyes, 
bushy eyebrows and a rounded, full beard; tall, broad-shouldered, 
self-confident. There were many good tales about him all over the 
countryside. 

Anyone who has studied the history of the English Revolution 
under CromweU knows what is meant by the term Nonconformists. 
Conformists are people who are content to go with the contem- 
porary stream. Nonconformists are the exact opposite. Such people 
are intolerant of any authority imposed from without ; they look on 
politics as a question, not of expediency, but of character. 

The stories about Grandfather Schacht are all concerned with his 
nonconformist nature. He studied medicine, first of all in Copen- 
hagen, later in Kiel. That was during the stormy eighteen-thirties, 



j8 My First Seventy-Six Years 

and what was more natural than that my grandfather should be 
mixed up in the students’ political activities. He had to get out of 
Kiel in double-quick time, and took his M.D. degree at Rostock. 

In 1850, when he was already an established doctor in Siider- 
stapel, the town became involved in the military discussions be- 
tween Schleswig-Holstein and Denmark. Siiderstapel changed 
hands more than once, and each time all the municipal officials 
had to present themselves at the town hall and swear allegiance 
to the new ruler. My grandfather did this twice. Tlien he lost 
patience. On the third occasion, when the beadle arrived to con- 
duct him to the town hall, he found my grandfather standing 
at his front door with a loaded pistol. 

The beadle rattled off his summons in the local dialect. “Eh, 
doctor, thou must come to town ’all and take oath. ’ ’ 

My grandfather gazed lovingly at the loaded pistol and answered 
in his deep bass: “And I’m fed up with all this coming and going. 
The next one as sets foot inside the door. I’ll shoot him!” 

The beadle noted this pronoimcement, went back to the town 
hall and repeated what he had heard. The Mayor scratched his 
head — and exempted the doctor from further oaths of loyalty. 

To the end of his days my grandfather never altered. Less of a 
business-man than bis father, he nevertheless succeeded in winning 
the respect and affection of his fellow-men, but he was always 
hard-up, for which he had only himself to thank. If a patient did not 
actually insist on paying more my grandfather would send him a 
bill in which each prescription carried a uniform charge of six gro- 
schen (say sixpence). I myself witnessed this astounding account- 
ancy in 1892 when I visited him during the Hamburg cholera 
epidemic. We went to the house of a well-to-do tradesman suffer- 
ing from rheumatism. Grandfather examined him, recommended 
a iirdment, warm compresses, and wrote a prescription for pain- 
relieving pills. 

“What’s the fee, doctor?” asked the patient, before we left. 

“Six groschen'\ said my grandfather. 

“But the man’s rolling in money,” I said to him later, “you 
could have made a proper charge.” He walked beside me, erect, 
pipe in mouth. “You don’t understand,” he said, “doctoring 
isn’t just a business.” 

The “sixpenny policy”, however, was the more questionable 
because he treated poor patients vnthout charging them even this 
small sum. So he never achieved wealth and could only m a ke scant 
provision for his family. And that family was by no means a small 
one— two children by his first marriage and nine by his second. 
But the doctor held to the parable of the lilies of the field; 



19 


The Schachts and the Eggers 

“They’ll grow up somehow”, he must have thought — and grow up 
somehow they did. No one knows what became of the children by 
the first marriage. Of the eight sons by his second marriage with a 
minister’s daughter, five emigrated to America and made good there . 

My grandfather’s main gifts to his sons were the sonorous and 
numerous Christian names with which he endowed them without 
consulting his wife beforehand. My father’s christening gives a 
good idea of the procedure. 

“What is this child to be called, Doctor?” the minister of 
Siiderstapel asked my grandfather as they stood at the font while 
my grandmother hovered near, all agog. Grandfather cleared 
his throat and began: “Wilhelm — Ludwig — ^Leonhard — ^Maxi- 
milian . . .’ 

“Hast thou finished?” interrupted my grandmother. 

Grandfather, startled out of his I'ecitation, took refuge in 
offended silence, and my father escaped with four names. 

Not for the life of her would it have occurred to grandmother to 
use her husband’s Christian name. She called him “Schacht”; 
that was how women usually addressed their husbands. She was a 
kind-hearted, unassuming woman with a general education such as, 
in those days, was to be found ahnost exclusively among daughters 
of the manse. 

I have already mentioned that I owe my name Hjalmar to the 
intervention of my Grandmother Eggers. Her choice of name was 
not fortuitous — one of her sons was Hjalmar, Baron von Eggers. 

My mother’s maiden name was Constanze Justine Sophie, 
Freiin* von Eggers. She was bom on the 6th June 1851 at Dyrhave- 
gaard near Kolding, and her marriage with my lather brought 
entirely new blood into the Schacht family. 

The Eggers came of old Hamburg stock. Four weighty tomes 
have been written about them, but I have little desird to copy out 
the interminable family trees. 

“Hans Eggerdes is my name, 

A Councillor in Hamburg known to fame. 

White are the roses on my shield, 

No stain my coat-of-arms doth yield.”t 

* The nearest English equivalent to Freiin when applied to the un- 
married daughter of a Baron, would be "The Honourable” 

t ‘ ‘ Hans Eggerdes bin ik genannt 

Ratsmam to Hamburg wol bekannt. 

Witt sin de Rosen in mynem Schild 
Und ohne Plecken myn Wappenbild’* 



20 


My First Seventy-Six Years 

So runs the legend, in Old German, under the portrait of my 
mother’s oldest known ancestor. The picture shows him in chain 
mail and helmet, tunic and jewelled belt, with two-handed sword, 
lance with pennant, and pointed shield bearing a device of three 
white roses. 

The descendants of this Hans Eggerdes turn up repeatedly in 
the history of this Hanseatic town. Among them are councillors, 
chief elders, justices, merchants. One died of the plague in 
1695, others emigrated eastwards. In the ninth generation Hen- 
ning, minister at Suderau, founded the Schleswig-Holstein branch 
of the family from which my mother came. 

These Schleswig-Holstein Eggers were the most successful, 
inasmuch as they were raised first to the ordinary nobility, 
later to the hereditary peerage. Nevertheless the other branches 
have not remained idle. There is hardly one of the ' learned 
professions or services, from ecclesiastical councillor* to painter 
and major-general that is not graced by one or more of 
the Eggers kinsfolk. The family is also connected by marriage 
with the physical sciences through Oerstedt, with the fine 
arts through Charlotte Buff (Goethe’s inunortal Lotte in The 
Sorrows of Werther), who is known to have married a Kestner. 
Her granddaughter married an Eggers in the middle of the last 
century. 

In my mother’s time the Eggers family had already passed its 
zenith, exemplified in the person of Christian Ulrich Detlev, 
Hereditary Baron von Eggers, Doctor of Law, Councillor to the 
King of Denmark, Lord-Lieutenant of Kiel, Commander of the 
Order of Dannebrog, etc. But signs of physical decline were 
already apparent. He was unable to use his legs before he was five 
years old, when he learnt to walk. He was an infant prodigy, 
silent, thoughtful, with a thirst for knowledge and an absolute 
passion for learning — ^with, at the same time, an irrestistible 
leaning towards the military profession. Who can fail to draw a 
parallel between this lad and such historical examples as the young 
Blaise P^cal, or Prince Eugene, for whom the French had no use 
as a soldier because he was too delicate for them, and who, there- 
upon, went over to the Austrians. 

Christian von Eggers was a shining light in his day, a universal 
genius who forgathered with all the celebrated men of the time. 
He travelled untiringly all over Germany, represented his country 
at foreign Courts and — there’s a nice story for those who believe in 
historical connections — carried out a finance and currency reform 

* The nearest equivalent of Konsistorialrat. 



21 


The Schachts and the Eggers 

in his native Denmark. Currency stablilization is obviously in the 
blood, so to speak! 

Together with Count Andreas Bernstorlf he worked for the 
liberation of the peasants from serfdom. In spite of being a martyr 
to asthma, headaches and insomnia, he evolved a working schedule 
and kept to it unflinchingly. Every other night he would work the 
whole night through, standing at his desk. He fought his head- 
aches with blood-letting. A man of iron will, he made up for his 
lack of physical strength by relentless energy. He died at his desk, 
while engaged on a written work, on the 2ist November 1813. 
Denmark owes him mneh. 

He was my great-grandfather, the same relationship as that of 
the Biisum shopkeeper on my father’s side. Sometimes I wonder 
what would have happened if the two old gentlemen had ever run 
across each other. It is quite possible to picture my great-grand- 
father, the Hereditary Baron, driving through Biisum in the course 
of his travels, and his carriage losing a wheel just in front of the 
local store. Being thirsty, he would call on Storekeeper Schacht, 
who would be standing in his doorway, in his shirt-sleeves, an apron 
tied round his middle. 

“Good-day, my good man,” would be great-grandfather 
Christian von Eggers’ greeting to great-grandfather Schacht. 
“You’ve a fine store here.” 

Great-grandfather Schacht would doff his little black cap and 
reply: “Would you be wanting to buy something?” 

“What have you?” von Eggers would ask. 

“A whole box of cigars — ^Virginia”, Schacht would answer. 

“I don’t smoke”, would be the Baron’s comment. 

“More’s the pity”, the tradesman would counter. 

And then they would stand and look at each other, the Heredi- 
tary Baron and the small shopkeeper of Biisum. One with his 
hand on the wheels of Europe, the reformer of laws, justice, 
peasant conditions, currency— the other seeing to it that the 
Dithmarschen country folk didn’t go short of salt and tobacco. 
Actually, the two were not so unlike. The difference lay in their 
mode of life— the one restless, driven hither and thither by his 
manifold duties, his ambition and his thirst for knowledge. The 
other had no worries — his only anxiety was that his son should turn 
out a first-rate doctor. The one stood on the heights, where the 
air bites and saps the strength: the other lived in the valley, con- 
tent with his own lot, ambitious only for his son. Descent and 
ascent rubbing elbows . . . no — such an encounter would have 
been most unUkely. 

How my great-grandfather in Biisum would have laughed if 



22 My First Seventy-Six Years 

anyone had told him: “Thy grandson’ll be courtin’ yon man’s 
granddaughter one day!” 

“Ho, ho, ho!” he would have roared: “That’s not bad! Say 
that again.” 

Christian von Eggers’ son, my grandfather, Chief of Police 
in Schleswig, left nine children unprovided for. Gone was the 
mighty urge which for a century had governed the family. All the 
Hereditary Barons von Eggers found their niches — but they no 
longer had their hands on the wheels of Europe. And the youngest 
daughter, Constanze, followed a young teacher to America and 
married him out there. 





/!.? a sluJait at the Joliaimcum, 
Hamimrt’, 1895 


With his clih'st diwshter 



At a Board Meeting of the Reidisbank in 1934 



CHAPTER TWO 


Three Towns beginning tmth ‘W 

T INGLEFF, where I was born, is a biggish country village 
east of Tondern in the mixed German-Danish district. 
When I was there in 1920 for the plebiscite it was proved 
that Tingleff was the most northerly village with a German major- 
ity. After we lost the first world war the Allies assigned the land 
beyond the so-called Clausen Line to Denmark: thus it happens 
that today my native village belongs to Denmark. 

My father taught in a private school in Tingleff. The house in 
which we lived still stands — a little inconspicuous house among 
many others exactly like it. 

The following year we left the little place and moved south to 
Heide in Dithmarschen, thereby coming full circle — ^for the 
Schachts were Dithmarschers, and during the whole of the Middle 
Ages Heide had been the focal point of this debatable Peasants* 
Republic. Father said good-bye to the teaching profession and 
became editor of the Heide News. In addition — since a journalist’s 
career did not carry a sufficient income — ^he was bookkeeper to 
Herr Viehdal, a wealthy cloth-merchant who also owned the 
Heide News, And finally, very reluctantly, he set my mother up in a 
small haberdashery business where she sold miscellaneous goods, 
lace, ribbons and thread. True, she did no sensational business, 
but it all helped, and she did it for my father’s sake. 

Those were the lean years. Unlike their biblical counterparts 
there were more than seven of them, and they led us in time to 
three towns beginning with “H” — ^Heide, Husum and Hamburg. 

The Heide News was liberal-minded and very original. It may be 
difficult to picture the activities of such a newspaper in the eighteen- 
eighties ; modern provincial newspapers obtain almost all of their 
material, with the exception of local news, ready for press and often 
actually in matrix from agencies and leading-article syndicates. 
They no longer represent independent opinion. Even in the Heide 
News there was plenty of space for local news — church services 
and markets, the water-level and reports of accidents, festivities 
and obituaries — ^but alongside these items there was plenty of 
thoroughly independent political discussion — ^politics in general, 
culturd items, literary criticism — all written by the editor. 



24 My First Seventy-Six Years 

Ready-made wholesale ideas had not yet succeeded in stifling 
individual thought. 

At no other period of his life did my father have the same 
chance of exploiting his ready wit, his gift of repartee and his 
knowledge of the world as he had on the Heide Nezos. He was a 
many-sided man whose only fault was that he disliked going into 
society. Of a retiring disposition, perhaps also a little awkward, he 
did not seem to fit into the social nttlieu to which my mother had 
been accustomed. Here in Heide on the other hand, in his own 
surroundings, among people who spoke his language, he felt 
entirely at home. 

The dull-wittedness of the local inhabitants must frequently 
have got on my father’s nerves. His comments on meetings of the 
town officials were often pungent and sarcastic. He delighted to 
reproduce verbatim in his newspaper all the errors in correct 
German made by the city fathers, whose tongues were accustomed 
to their local dialect; so the town councillors were not always 
inclined to back him up. At one session, when he had requested the 
beadle to bring him a lamp as it was growing dark, the lamp was 
removed following a resolution put forward in accordance with the 
regulations. The authorities were not interested in his activities as a 
reporter. But that did not worry my father, who was prepared for 
that kind of thing. He had brought a stearin candle with him and 
now calmly proceeded to extract it from his pocket, light it, and 
continue his writing quite happily. An indignant protest from one 
of the councillors and a new resolution for the removal of the candle 
introduced by the words: "Once again I observe a light behind 
me” were unavailing. 

The Heide Nezos therefore had decided views of its own (i.e. my 
father’s) and the public expected this. After all, we lived in Schles- 
wig-Holstein, a German province which was in a state of continual 
ferment owing to Danish nationalism. In addition, the "Liberals” 
were in the majority: in a lahd where the people depend for a 
living on cattle-feed, cattle rearing and cattle-dealing, the individual 
is all against bureaucracy and in favour of free economy. 

Repercussions of my father’s journalistic activities were not 
wanting. District councillors, clergy and men of letters wrote to 
him; a voluminous correspondence followed, among others, with 
the dialect poet Klaus Groth, a native of Heide who later moved to 
Kiel, where I looked him. up in my student days. 

As I was only five years old when we left Heide, my recollections 
of this period are naturally somewhat hazy. In spite of everything 
I believe that niy father found intellectual satisfaction there. In 
those days an editor was able to give his readers more than he can 



Three Towns beginning with “H” 


25 


today. The printed page found its way into the depths of the 
country where life was colourless, monotonous and uneventful. 
There was no cinema, no radio. The newspaper was read and 
discussed from the first word to the last, from the humblest cot- 
tager to the farmer, teacher and minister. As far as was possible 
within the limits of circulation my father really did produce some- 
thing worth while. It can’t have been an easy job to keep a paper 
like the Heuk News going in a rural district. At the time when he 
was feeding his MSS. to the Viehdal press, experiments were being 
made in London with a “speaking- wire” and many sensational 
reports were published about it. '^ere would a modern editor 
be without the telephone? 

I have dim memories of the house in which we lived — the dark 
passage leading to the back door. Once through that door we were 
in mother’s garden where there were always a few flowers as well 
as vegetables and herbs. Here I used to play with Herr Viehdal’s 
curly-headed sons until I was tired and would trot back to mother’s 
haberdashery store . Then she would show me some of her treasures, 
let me mess around in a piece-box or “help” her in the kitchen. 

One small incident from the Heide days remained for a long 
time in my memory. I had almost completed my fifth year. At the 
end of our long Htchen-garden was a tiny wooden hut which 
might once have been a stable or outhouse. Now, however, an old, 
childless widow lived there, eking out a miserable existence by 
charring, and even worse off than we were. I was rather scared of 
the old thing, for outwardly she was just like the picture of the 
witch in the fairy-tales. But occasionally curiosity proved too much 
for me. So it happened that I saw her one day eating her supper, 
which consisted of a thick slice of black rye-bread. I noticed that 
there was no butter on it, except a tiny scrap in one comer. 

“You haven’t any butter on yotir bread,” I said. 

“Well, my child,” the old woman replied, “I haven’t enough 
money to buy butter for a whole slice. But look, I have put a wee 
dab of butter in the very last comer, and now I eat from the other 
end and look forward with each dry mouthful to the last bit, when 
I shall have the butter too. That last bit will taste just twice as 
good.” 

A few evenings later my father told a story which fits in well 
with this little occurrence. If I did not understand all the 
details, the sense of what he said sank in. In order to appreciate 
the circumstances you must know that Heide was a celebrated 
cattle-market — ^the largest in the whole province. Indeed the little 
church, situated to one side of the market-place, must have felt 
quite lost. 



26 My First Seventy-Six Years 

In the spring the Dithmarschen peasants would buy up the 
young lean stock from the poorer pasture-lands. The cattle grew 
fat of their own accord on the rich meadows of the Marsch, and in 
the autumn were ready for killing, and driven to market. Market- 
days in Heide were one huge hustle and bustle of men and cattle. 
Dealers and wholesale slaughterers from Hamburg and large 
neighbouring towns crowded into the inns, inspected the cattle 
in the pens and concluded their deals with the farmers. There 
was much haggling and reckoning at which the farmers showed 
themselves no less adept than they were at husbandry. 

Business over, everybody flocked to the public-house in the 
evening and had a rare old time celebrating the experiences and 
events of the day. Of course my father had to report all the goings- 
on for his paper. One evening he came home and described the 
gay doings of the farmers and cattle-dealers. 

‘‘Their pockets were bulging with money and they kept 
jingling their coins while they drank and talked big. But do you 
know, wife, what they drank?’ 

“Beer — or grog”, said my mother. 

“Not a bit of it. Champagne was just good enough for these 
gentlemen.” 

But It was not merely the champagne that aroused his indigna- 
tion, One of the cattle-dealers — or maybe farmers — a bumptious, 
self-satisfied fellow, evidently found that he couldn’t spend his 
money fast enough on nothing but drink. As he was already as 
drunk as could be, but still wanted to get rid of his cash, he had 
sent for a hamperful of champagne, raised his heavy stick and 
with one stroke had struck off the heads of every single bottle. 

My mother shook her head in disapproval. Then she put us to 
bed, took a small tumblerful of water into which she poured a few 
drops of oil, placed a cork with a wick on top and lit the wick. 
That was our night-light which burned till morning. Whenever we 
awoke during the night the tiny flame was always burning and 
shed a queer bluish light on the whitewashed walls of our bedroom. 

That evening it was a long while before I could get to sleep, 
for thinkmg again and again of the old woman with the wee dab 
of butter on her bread and the broken necks of the champagne 
bottles. 

j undoubtedly bettered himself when he accepted 

Viehdals offer to take over the editorship of the Heide Nem. 
Unfortunately the improvement began and ended there. He 
worked hard on his paper, infusing into it wit, humour, intelli- 
gence and sarcasm; but neither the number of advertisements nor 



Three Tozons beginning with “jH'” 27 

the number of copies showed any sign of increase. When, after 
four years, he realized that things would never be different he 
packed up and started looking around for another job. He found 
one in Husum with a Jew named Gold, who was looking for a 
manager for his soap factory. 

So we moved to Husum — “the grey town by the sea” as the 
poet Theodor Storm has it. He had lived there in his capacity as 
County Court Judge (Amtsgerichsrat) for several decades and had 
retired on pension a few years previously; a splendid old man 
with snow-white side-whiskers, beloved and admired throughout 
Germany for his exquisite poems and delicate, sensitive stories. 
For more than one reason Husum and Storm are indissolubly 
associated in my mind. Both are melancholy, mysterious, some- 
what old-fashioned. 

Holding on to my mother’s hand I would walk along the cobbled 
streets, mostly poUshed smooth by the drizzling rain, and gaze 
admiringly up at the gabled houses rising like steps on either side. 
I was especially charmed with the little carved turret on the town 
hall. 

One day my mother took me to the dame-school in Husum, 
where I remained for a year. I was a healthy five-year-old; there 
was no reason why I should not begin to learn my AB C. So every 
day I trotted through Husum wearing my cap and carrying my 
satchel; with my schoolfellows I played by the harbour and 
stared entranced at the vessels arriving from strange parts of the 
world such as Nordstrand, Pellworm or even Cuxhaven. 

In the meantime my father had donned the soap-boiler’s blue 
apron and taken over the management. Each time mother took us 
(iildrcn to see him at the soap factory she returned home rather 
depressed. The working premises reeked of randd fat, they were 
cold and slimy with remains of soap. The fat in the barrels was 
revolting, the great vessels full of corrosive solutions, the bursting 
sacks of caustic alkali, the vats in which the masses of soap were 
boiled with glycerine — everything was strange, weird, dangerous 
and somewhat oppressive. Even the phials of perfume which were 
added to the mass of stuff when the process was completed were 
not able to reconcile mother to the soap factory. She disliked our 
father’s job because she saw that he disliked it. 

My father was anything but a cheerful soap-boiler. I wonder 
what put it into the poet’s head to call his hero “Jovial Jack”, 
During those months I knew my father only as a disgruntled man. 

For a long time he would not realize that a man who was capable 
or turning out a first-rate leading article on the position of 
Schleswig-Holstein in between Denmark and Prussia may be a 



28 My First Seventy-Six Years 

wretchedly bad soap-boiler, and that one job is by no means as 
good as another ; that the post was not too much for him but quite 
simply not his line. 

There are different versions of the happenings of that year 
1882-83; but somehow or other the soap factory went bankrupt. 
Had Herr Gold engaged my father solely in order to have a scape- 
goat ready to hand ? Had my father anything to do with the non- 
success of the soap made in Husum? Did the firm go smash 
entirely on its own without his having had anything to do with it ? 
I don’t know. All I do know is that one day the doors of that 
unsavoury concern closed for good, and once again we were 
uprooted. This time our goal was the Hanseatic city of Hamburg. 

We entered Hamburg — ^the town in which my ancestors (not 
my father’s) had held the highest positions — ^through the back 
door, so to speak. At that time I was just six years old. 

Hamburg has always been a hard nut to crack. Her inhabitants 
know the value of money ; millionaires and starving folk are to be 
found within her walls. Social distinctions were greater in Ham- 
burg than in other German cities. The shipowners, retail traders, 
heads ofthebig,old-fa8hioned counting-houses — ^they were the rich. 
The dockers, stevedores, rope-makers, day-labourers, auxiliary 
workers, casual labourers — ^they were the poor. 

We arrivedin Hambvug without a penny, having left behind us in 
Husum a bankrupt soap busine®. For my father the outlook was 
not encouraging. He had knocked about the world for thirteen 
years, and for ten years had been a married man. My brother Oluf 
was on the way, Eddy had passed out of the third standard in 
elementary school and was going to secondary school. It was an 
anxious time for our little household when we came to Hamburg 
in 1883. 

My mother had need of all her courage and all her faith to enable 
her to weather the set-backs and vexations of those early years in 
Hamburg and, in addition, to keep up her husband’s spirits. 

My father’s own nature had a lot to do with it. In his younger 
days he had been a restless wanderer, unable to remain for long 
in any one place — a typical rolling stone. His great-grandfather 
had still belonged to the farming community; his grandfather had 
invested the portion made over to him by his brothers in a general 
store, where it had multiplied. To a certain extent my father’s 
godfather had been a fixture ; in this way he had been able to put 
his talent to good account and, since he had but one son, had sent 
him well equipped into the world. My grandfather went to college, 
built up a practice, and spent the money left by his father, the 



Three Tomts beginning with "H" 


29 

Biisum shopkeeper, without troubling to ask where it came from. 
Nor did he bother much about making provision for his sons. 
They had to start from scratch — ^but this time without farming 
relations and a steady business. 

My father’s position and that of his seven brothers was therefore 
a thousand times more difficult, especially when one realizes that 
they came from an entirely intellectual home. Their father was a 
doctor, their mother a minister’s daughter. They had outgrown 
the peasant class. But they had no intellectual relations who could 
help them. All this explains much of the restlessness that led to 
my father’s roving habits, 

I too have inherited something of that restlessness. I too have a 
fair amount of quicksilver in my blood, exactly like Eddy, who 
travelled over half the world and for many years practised as a 
doctor in Assuan in Upper Egypt. But we owe it also to our father 
that this same restlesncss, far from proving a handicap, actually 
contributed to our advancement. He laid Ae foundations of the 
new Schacht family. His was a hard road with many set-backs, and 
he had no one to advise or help him — except our mother. 

In our early Hamburg days we lived in the back of some premises 
on a suburban street. Our windows looked out on to a square, 
paved back-yard where we used to play when we were not in school. 
The neighbourhood children eyed us somewhat askance the first 
time we encountered each other. We gave as good as we got — 
sneers, challenges, finally blows. In the end it was one glorious 
rough-and-tumble. When eventually we formed part of the gang 
belonging to this block of houses we used to play on the streets, in 
the Heiligengeistfeld, or in the yard. 

Streets in those days had not been turned into death-traps by 
motors — for the simple reason that there were no such things. 
Only now and then did the cobbles echo when a brewer’s dray 
drove down the road drawn by huge horses with docked tails and 
little ear-caps. Or else it would be an omnibus — ^forerunner of the 
electric tram which at that time was undreamed-of. This was a 
horse-drawn bus with five wheels, four of which were connected 
with the driving while the fifth ran on a rail and kept the clumsy 
vehicle on its course. Sometimes we children would place a heavy 
stone on the track. Then the bus would have to stop, the driver 
would jack-up the wheel high above the ground, drive over the 
stone and let down the wheel again. 

Such was the easy-going machinery of those days. It must be 
admitted that the driver was not so easy-going — ^he hurled abuse 
at the brats who filayed him such a dirty trick. 



20 My First Seventy-Six Years 

One day my father returned from town looking very cheerful. 
After many unsuccessful attempts he had at last found another book- 
keeping job with the big coffee importers Theodor Schmidt & Co. 

Eddy, meanwhile, had passed his entrance examination and was 
in the first form at the “ Johanneum”, Hamburg’s famous classical 
grammar school. It must have given my father profound satis- 
faction that his eldest son was able to attend this excellent institu- 
tion. How he managed to meet the school fees month by month is a 
mystery. But manage it he did, and every morning Eddy would 
leave the house three-quarters of an hour before school was due to 
begin, and walk across half Hamburg in order to fill his brain-pan 
with knowledge. 

In the evening father would devote himself entirely to us; he 
would talk about technical inventions, great scientists, history, 
commerce, and world economics. He would remark, for instance : 
“There are trains now with a little cogwheel underneath. The cog- 
wheel runs on a third rail between the two other rails. Can you 
imagine, Mother, why they do that?” 

Mother would shrug her shoulders. “Maybe so that they can 
brake better,” she would answer. “The trains do go so fearfully 
fast!” 

“Nonsense!” said father. “It’s so that they can travel up 
mountains.” 

“Why do they want to go up mountains by train?” enquired 
Eddy. 

“They want to go everywhere,” my father explained. “Techni- 
cal invention stops at nothing — ^it wants to spread everywhere. 
That’s a part of human nature. One day we shall even be able to 
fly.” 

“To fly!” we children exclaimed. 

“People already fly in air balloons,” he went on. “They make 
a huge bladder which is filled willi hydrogen, which is lighter than 
air. In this way man can ascend right up into the clouds. If they 
can incorporate a motor and steering gear they will be able to fly 
wherever they please.” 

On another occasion he told us excitedly about a new invention 
by a certain Herr Auer von Welsbach. He covered gas flames with a 
kind of stocking which made them give forth a radiant, powerfol 
light. 

“A stocking! ” mother asked in astonishment, letting fall one of 
my father’s socks, of which she had just finished darning the heel. 

“Not that sort of stocking,” he explained. “Auer calls it a 
stocking because that’s what it looks like. It is made of threads 
specially treated with rare kinds of soil.” 



Three Tenons beginning zoith '‘H*’ 


31 


But he couldn’t persuade mother to take any interest in it. 

“You may keep your gas,” she said, “it stinks; besides, it’s 
dangerous to life and limb. I’d rather have my oil lamp.” 

But my father’s streaks of bad luck were not yet over. True, his 
salary with Theodor Schmidt & Co. was adequate, but it depended 
on the efficient running of the business. Unfortunately this 
efficiency was lacking. 

It was in 1885 or 1886 that a large-scale gamble in coffee ended 
in sensational failure in Hamburg. The consumption of this 
favourite beverage had steadily increased since the war of 1870 
and the firm of Theodor Sclunidt & Co. had gambled on an up- 
ward tendency in the market. But the upward tendency did not 
materialize and Theodor Schmidt & Co. found themselves unable 
to meet their obligations. They were compelled to dismiss nearly 
all their employees, including my father. 

Once again we struck a bad patch. For months my father called 
on one firm after another in his search for a suitable position. 
He found casual work here and there, but his earnings amounted 
to mere drops in the ocean; our total income was nowhere near 
sufficient. We lived literally from hand to mouth. 

I well remember my eighth birthday during that period. In our 
home it was customary to give each birthday child as many oranges 
as he was years old. That year, however, must have been an espec- 
ially bad one for us — anyhow, on my birthday morning I received 
only two oranges and a five-pfennig piece (less than id.). 

“Run and get two-pennyworth of coal,” my mother said, and 
laid the money on the table. Silently I picked up the bucket and 
the coins and trudged along to the coal-merchant’s, who had set 
up business in a cellar. One or two women were gossiping in the 
gloomy place, a candle burnt on an upturned packing-casc, bundles 
of firewood were stacked against the wall and at the back was the 
coal depot. 

“Hullo — come for some more coal?” the coal-merchant asked, 
interrupting his conversation. Perspiration had left wide streaks 
on his black face. On his head he wore a sack, hood-fashion. 

“Two-pennyworth”, I said. He pocketed the cash — ^the price 
of two drinks — and filled my bucket with scraps of coal. 

“Who’s that?” a woman asked as I went out. 

“One of Schacht’s kids. His father was with Theodor Schmidt 
& Co., and they bought so much coffee they couldn’t get rid of it.” 

Yes — it was a bad patch. 

One evening my father returned in high spirits from a lengthy 
trek through Hamburg. He burst into the living-room, tossed his 



22 My First Seventy-Six Years 

overcoat on to a chair, grabbed hold of my mother and gave her a 
kiss. That in itself was a rare enough occurrence in our rather 
reserved household, where hardly anybody ever kissed. 

“Mother,” he said, somewhat excitedly, “I’ve found some- 
thing!” 

My mother clasped her hands over her heart and exclaimed: 

“Afloat have you found?” 

“A post where I can make use of my American experience. A 
post — ^not highly paid, but there are prospects.” 

“What is the name of the firm?” 

“I’m a boolckeeper in the American Equitable Life Insurance 
Company,” my father said. 

Equitable Life Insurance — the reasonable, just, fair Life 
Insurance Company — however one cares to describe it. Ever since 
that evening the name has a pleasant sound for me. For it was here 
that my father found that for which he had been seeking and long- 
ing throughout his hopeless, endless tramps all over Hamburg, 
knocking and being turned away from one door after another — ^it 
was here that he found a position in life — a niche. 

He entered the service of the Equitable Life Insurance and they 
treated him fairly according to the promise implied in their title. 
He remained there thirty years, advancing step by step up the 
ladder, earning more money, until in his old age he was General 
Secretary of the Berlin Office. About this time he built a small 
house in Schlachtensee — and what could be more natural than 
that it should be called “Villa Equitable”? 

No world-shattering event. But I was just sufficiently sensible 
to understand what this news meant. For us five they meant a 
great deal. 

Eddy would be able to return to the “ Johanneum”, and there 
would certainly be a place there for me too. The family was now 
secure; we could count on regular money every month; it would 
even be possible to save a little. Splendid news! 

On the 19th August 1887 Grandmother Eggers died in my 
parents’ house in Hamburg. I still distinctly remember the 
funeral rites; the bier in the best parlour, the dark coffin, the 
relations who had come to pay final tribute to their mother. 

Grandmother came from Itzehoe, north of Hamburg. Her 
father was a well-to-do, unassuming, middle-class merchant, Evers 
by name. She had made the acquaintance of Friedrich von Eggers 
in her parents’ house. The only son of the famous Christian 
Ulrich Detlev, he was what is described as a good match. In the 
course of years they had nine living children, among them six sons. 



Three Towns beginning with “H” 


33 

But when my grandmother was in her seventies it was not to her 
wealthy sons that she went, but to her youngest daughter Constanze, 
although the latter had perhaps less money and also less comfort to 
offer the old lady than any of her brothers and sisters. I assume 
that she was her mother’s pet. Perhaps too my grandmother 
longed for a return to the middle-class surroundings from which 
she came. Whatever her reasons, she turned up one day in Ham- 
burg when I was nine years old, and remained with us till her death. 

By this time father’s dream had come true : we were living in the 
front part of the house and were looked upon as belonging to the 
better-class tenants. The days of back premises were over. That, 
however, did not mean that we were able to indulge in unbounded 
luxury; father’s income was still too small. The Equitable Life 
Insurance was a safe job, but it was certainly no gold mine. 

In my mind’s eye I can conjure up a clear picture of our home 
in those days. It was very simply furnished; plain carpets on the 
stained floors, one or two colour prints on the walls; a glass- 
fronted bookcase held father’s favourite books (classics, of course) 
in stamped, gold decorated cloth bindings. I particularly remember 
Shakespeare’s works next to volumes of poetry — Goethe, Schiller, 
Heine — a couple of novels by Dickens, who at that time was not 
yet reckoned as a classic but was uncommonly popular, and several 
books in the Tauchnitz edition. In the evening father would take a 
volume from the bookcase and read aloud to us — a poem, a bit out 
of a play — and discuss it with is. Throughout his life, literature, 
good books, were a real need of his. Music did not interest him 
as much ; that was more in the Eggers line. 

Gone were the days when we bought two-pennyworth of coal. 
The living-room, wWe Eddy and I sat and did our homework, 
was always warm. Oluf, ‘ ‘ the baby ”, took his nap in a corner of the 
room. Unlike Eddy and myself he was dark and took entirely after 
the Eggers. 

Mother busied herself in the kitchen. When it was time to carry 
the laundry baskets of home-washed linen from the wash-house up 
to the attic she would call Eddy and me ; then we would leave our 
writing and lug the heavy baskets right up into the attic where the 
washing lines were. 

We still had no maid. Mother had to do all the work — cooking, 
mending, washing, scrubbing. Even now I can’t imagine how she 
did it and managed to keep cheerful and good-tempered. At the 
time we took it for granted. She was up before anyone else of 
a morning, and made coffee for father and the two schoolboys. 
When we arrived home the house was tidy, the beds made, the 
fire burning brightly in the living-rdom, the dinner ready. What 



My First Seventy-Six Years 

did we have for dinner? Well, in those days our meals were vei-y 
simple; buckwheat groats, large dumpling (also called flour-bag 
pudding) and “Swartsuer”, a kind of Spartan black broth, not 
unlike the broth that the Lacedaemonian warriors had in their 
youth. The plain food was wholesome and nourishing and there 
was plenty of it. It was not so long ago that Matthias Claudius, 
editor of the Wandsbeck Messenger, had written his Potato-Song : 
“Pasties here, pasties there. What do we care for pasties ...” 

Heaven knows, we cared little enough — ^we didn’t even loiow 
what they looked like, until a certain occasion which made a great 
impression on us children. The Eggers family gathering, wliich 
took place in the spring of 1887, about six months before grand- 
mother’s death. Our family would probably not have been so 
interested in this festivity had grandmother Eggers not been living 
with us. The fact, however, that she was the doyenne of the baronid 
line was a potent reason for holding the festivity in Hamburg in 
her honour. 

Between forty and fifty people sat down to dinner in the dining- 
room of a Hamburg hotel, where they feasted, drank and listened 
to speeches. At intervals the children were brought in ; old mem- 
ories were revived and — so far as the men were concerned — a great 
many cigars were consumed. 

At the time, this family gathering attracted quite a lot of atten- 
tion. My impression is that the Hamburgers considered it rather 
absurd. After all, we lived in a Hanseatic city which from the 
thirteenth century onward had been tremendously conscious of 
its sturdy middle-class citizenry and whose aristocracy had kept 
clear of titles. Malicious tongues could not refrain from jeering 
at this baronial display, and later there was a popular saying in 
Hamburg about “Those Eggers and their high-and-mighty ideas.” 

At any rate there remained the recollection of a splendid feast, 
smartly dressed people and, in my case, the picture of my mother 
among her relations. At that time she was thirty-seven years old 
and certainly the loveliest of all the women present, She had a 
finely-chiselled face, dark hair in which a few silver threads were 
already visible, and great dark expressive eyes. She was there 
among the others, beautiful, kindly, joining in the lively conversa- 
tion at intervals, but for the most part, listening. Everyone liked 
her, and I was immensely proud of her. 

Mother had a small but very pretty singing voice. When the 
daily tasks threatened to be too much for her, her favourite song 
WM “Wait on the Lord, my soul, be not dismayed; co mmi t all to 
Him, He will come to thine aid . . .” But she sang other songs 
too. 



Three Towns heginnirig with 35 

“Sing to us, mother,” we would beg when darkness had fallen 
and we had finished our homework. 

She needed no urging. In those days there was no radio; 
anyone wanting music had to provide his own. My mother was 
musical by nature. Singing to us was at the same time a recreation 
— German songs, dialect songs, Danish songs. When mother 
sang we sat silent, listening. And many hours later when we lay in 
bed we would sometimes hum “ Little Ole with his Umbrella ” (one 
of her Danish tunes). 

Mother was equally at home in two languages. She had learnt 
Danish almost before she had learnt German — ^not siurprising, 
seeing that she was the granddaughter of a Danish councillor. 
But it was not until half a century later that I learned how deep- 
rooted was the Danish element in her nature. On her death-bed in 
1935 in Berlin-Schlachtensee she began to mutter to herself. The 
doctor and the hospital nurse stared at one another in astonish- 
ment. She was saying the Lord’s Prayer in Danish. 

At that time I myself was nearly sixty. All my life I had spoken 
German with my mother. But the memory of her Danish home 
proved stronger than the habit of a lifetime. Her last words 
revealed that she was back once more in the land of her birth. 



CHAPTER THREE 


Three Emperors in One Year 

B etween the ages of six and nine I attended the Prepara- 
tory School of the Teachers’ Training College in ABC 
Street, about half-way between Alstereck and Holstenwall. 
As my parents at that time lived in the Eimsbiitteler-Chaussee, 
North St. Pauli, I had to cover quite a tidy distance which did not 
grow any less when, at nine years old I passed the entrance examina- 
tion for the “ Johanneum”, a grammar school, famous throughout 
Germany, founded by Johann Bugenhagen in 1529, when German 
humanism was at its zenith. 

The school was situated at Speersort, opposite St. Peter’s 
Church. St. Pauli was at the extreme west of Hamburg; the Old 
Town and Speersort were at the east end. Every morning, there- 
fore, I had to trudge the entire length of the Eimsbiitteler-Chaussee 
as far as the Miller Gate, then right across the New Town, over the 
Fleete to the Old Town and findly along the Rathaus Street to the 
Speersort. Even a good walker would need the best part of an 
hour. 

In other words, I came from the fields of St. Paul, traversed the 
preserves of St. Michael and studied under the protection of St. 
Peter. 

The entrance examination at the Johanneum took place at 
Easter 1886, just after my ninth birthday. My parents, of course, 
took me to the venerable building escorted by brother Eddy, 
proudly sporting his school cap and overflowing with good 
advice. In the big entrance hall we met other parents with their 
children, all looking very serious and whispering softly as if they 
were at a funeral or an execution. 

At last a master appeared and conducted us — ^without our 
parents — ^into a large room where we were examined on every 
possible subject for four long hours. Admittance to the Johanneum 
was no trifling matter. 

My biographer, Dr. Franz Reuter, describes my method of 
passing the entrance examination; “in the Arithmetic test for the 
Sixth (lowest) Form Schacht distinguished himself by arriving 
at a different result from all his fellow-candidates ...” And 
Norbert Mtihlen (of whom more later) in his book Schacht the 



Three Emperors in One Year 37 

Magician says : “ In arithmetic he achieved a wrong total. A strange 
omen for a future past-master of financial calculation . . 

Luckily I did better than the average in other subjects, so I 
passed just the same. 

If later on I had taken up law or theology nobody would ever 
have breathed another word about that examination of 1886. As it 
is, people to this day tackle me on the subject. “A banker who is 
bad at figures;” they say, “how on earth is that possible!” Then 
I tell them the story of the famous mathematician who was obliged 
to resort to a slide-iule. “Nine divided by three, gentlemen,” he 
would say, “is — one moment, please — is two, decimal nine, nine, 
nine ... let us say approximately three!” And for all that he 
really was an exceptionally good mathematician. 

In spite of my low marks in arithmetic I have not been entirely 
unsuccessful in my career as Banker and President of the Reichs- 
bank. A bank inspector or manager is not a boolckeeper. His work 
entails expert knowledge of quite different subjects, e.g. psycho- 
logy, economics, commonsense, ability to mice decisions, but 
above all, insight into the intricacies and the nature of Credit. 

When, on my arrival at school, my address was noted, I very 
soon learned that the better-class Hamburgers did not live in St. 
Pauli but in Harvesehude or Uhlenhorst. 

“Eimsbiiteler-Chaussee — ^isn’t that at the back of the Heiligen- 
geistfeld? What sort of a neighbourhood is that?” -my better-off 
schoolfellows would ask. 

I didn’t know how to answer and the fact that our address was 
not up to standard made me very uncomfortable. Although I 
was among the brighter pupils it did not prevent my being 
cold-shouldered, ^d only when I reached the higher forms did 
I manage to make some impression. 

My father had to strain every nerve to send both Eddy and 
me to the Johanneum. We knew that, because of us, he never 
went to the theatre, nor drank wine, and that he allowed him- 
self only one cigar per day — and that one of the cheaper brands. 
Our life at home was one of Spartan simplicity; we received no 
pocket-money for non-essentials, and as for our clothes they were 
certainly not in the latest fashion. 

“Anyone who wants to get on in the world must learn not to 
depend on externals,” father would sometimes say. I don’t know 
whether at that time we children understood just how bitterly this 
consistency affected him. After all, he could easily have followed his 
own father’s example and not bothered so much about his son’s 
future. 

It is possible that this perpetual denial of the outward pleasures 



38 My First Seventy-Six Years 

and enjoyments of life influenced liis character and made him hard. 
If that was the case he suffered under it more than we did. Anyhow, 
he never lost his zest for stimulating discussions on literature, 
international politics, trade and technics, for he would talk with us 
of an evening, as he had always done, and he followed our progress 
at school with close attention. 

There comes a time in every boy’s life when his ambition is to 
wear long trousers. His voice breaks, he begins to shoot up, and 
his long thin legs embarrass him. Somewhere too there exists the 
object of his hero-worship — a young master, a top-former — and 
this hero naturally wears smartly-cut, well-fitting long trousers 
and in other ways behaves like a grown-up. 

So I began to worry my parents, telling them that I was one of 
the more advanced pupils in a form where the other boys had been 
going about for ages with tubular leg-coverings I High time that 
Schacht junior also donned trousers I 

My first pair was a severe shock to my self-esteem for some time 
to come. My father took me to an outfitter’s and after a long search 
picked out a pair made of good, strong hardwearing shoddy. Do 
you know what shoddy is? True, it is an English product, but it 
certainly is not a good example of what is understood by English 
cloth. A rough, hairy, felt-like, shapeless affair without glamour 
or distinction, unless it be at the knees and the seat. 

I put on the trousers and went off to school. The collective 
result was not what I had hoped. My classmates looked at me and 
burst out laughing; "Schacht’s wearing shoddy trousers!” 

, All my pleasure in the trousers was spoilt. I struggled all the 
more savagely with irregular verbs, spherical trigonometry and the 
adventures of Odysseus. 

Perhaps my masters sensed something of this struggle. They 
were excellent instructors. Old Hamburgers will remember such 
names as Bubendey, Leithauser, Fritsch, Schultess and Metz; no 
windbags, but warm-hearted human characters. 

At that time there was a man whose name was held in high 
honour by masters and pupils alike. He was Professor Hermann 
Schubert, the mathematician of the Johanneura; about forty years 
old, a native of Potsdam who, at the age of twenty-seven, had been 
awarded the Large Gold Medal by the Danish Academy of Science 
for a work on Ch^acteristics of Spatial Curves of the Third Dimen- 
sion. L,ater he edited the “Schubert Collection” which published 
textbooks for students of mathematics and mathematical physics, 

Schubert was one of the last of the humanistic mathematicians ; 
the next generation already included names like Planck and 



Three Emperors in One Year 39 

Einstein, after which the universal conception of the Humanists 
was superseded by mathematicians, technicians and natural- 
scientists. 

But we of course could foresee none of that. School was a self- 
contained unit ; the subjects forming the hub around which other 
activities revolved were Languages, Histoiy, Religion, Literature. 
Mathematics, Physics, Chemistry, iNatural Science were, so to 
speak, the outer circle. I was chiefly interested in the intellec- 
tual sciences, less so in other subjects. In this way I managed to 
maintain my place in the Upper Third just as Eddy had done. 

But I did not push myself forward. Remarks in my school report 
such as: “A wide-awake pupil, but not above the average, even 
among his schoolfellows”, may have been connected with such 
experiences as the one with the shoddy trousers. I think I took 
refuge in solitude by way of reaction to the social differences in my 
form. 

The sons of the “better-class” households were members of 
the exclusive rowing and sailing clubs which met on the Alster 
beyond the Lombardy Bridge. They had their own boats, attended 
dancing classes, sported frock-coats at an early age and in summer 
went with their parents to Switzerland, Italy or Norway. 

The other boys had no part in these wonderful doings. If we 
found the heat too much for us in summer we took a twopenny 
steamer ticket to Steinwerder and for another fourpence we hired 
a cabin at the free Public Baths. It was all great fun and very 
healthy — ^but still — ^it wasn’t the same thing I 

The contrast was never more apparent ihan on the occasion of 
my leaving examination {AMturientenexamen). It was customary 
in those days for examinees to present themselves in frock-coat 
and dress shirt, so I had to find some way of procuring these 
necessary items. The problem was solved by the fact that the 
examination was divided into two parts held on two successive 
days. I was due to attend on the second day ; a schoolfellow of about 
my build had been assigned to the first. "Vi^en his ordeal was over 
I slipped into his outfit and took my turn. 

I can never sufficiently stress all that I owe to the classical 
humanistic education of the Johaimeum. Not only did it enable me 
to become acquainted with the outward sequence of Ancient 
History, Renaissance, Classicism and Romanticism, but above all 
it afforded me an insight into the spirit and character of these eras. 
It imbued my life wi^ a sense of harmony, an objective tolerance, 
and opened my mind concerning the development of my own tirpe, ; 
and it equipped me to face success and failure with common sense, 
stoic cotirage and unshakable confidence. 



My First Seventy-Six Years 

On the occasion of the Johanneum’s fourth centenary celebra- 
tions in 1939 I was able to express my gratitude by the establish- 
ment of a Foundation, the income from which would enable two 
school-leavers to spend some time abroad. Unfortunately this 
foundation was one of the victims of currency depreciation. 

The decisive years of my life occurred between 1888 and 1893 
between my eleventh and fifteenth years. 

In 1888 Germany had three Emperors in succession. In 
October of the same year Hamburg was included in the German 
Customs Union. 

The year 1893 was that of the great cholera epidemic in 
Hamburg — ^the last of its kind within the Empire. A few months 
previously my parents had moved to Berlin. 

Until then I had no real conception of the power and importance 
of a German Emperor. Wilhelm I, a white-haired patriarch, 
resided in Berlin. I knew vaguely that he had been severely 
wounded in 1876 when someone had attempted to assassinate him, 
and for six months his son Friedrich had taken over the reins of 
government. This same Friedrich represented the hope of the 
free middle classes. Wilhelm I and his Chancellor, Bismarck, 
might be outstanding, wise and at the same time inclined to 
moderation in foreign politics. But what, said many people, was the 
good of foreign policy when internal questions still remained to be 
dealt with? 

The nation looked to Wilhelm I’s successor to give the middle 
classes a larger share in the Government, to ensure a more liberal 
development in German internal politics, and replacement of 
inherited aristocratic privileges by middle-class institutions. 

That none of this was based on any fundamental difference of 
outlook or “philosophy of life” {Weltanschauung) between people 
and government is certain. Perhaps there would never have been 
such a thing as a “philosophy of life” in Germany had things 
developed dong somewhat different lines. But the unhappy 
events of the “Year of the Three Emperors” involved what 
amounted practically to the passing-over of an entire generation. 
Germany stepped from the era of conservative thought straight 
into the Socialist era. Liberalism, which Bismarck once described 
as “the early crop of Socialism” never came into the picture at all. 
A Liberal period would have entailed the achievement of the 
necessary compromises such as had been achieved in England. 
New political tendencies would have developed gradually j the 
connecting link between the aristocratic reigning house and the 
Marxist masses would have been found. 



Three Emperors in One Year 41 

The Liberals hoped that all this might come to pass during the 
eventual reign of the Crown Prince Friedrich, who had more than 
once indicated that he was a progressive thinker, quite prepared to 
make a change from the hidebound methods of the old Emperor. 
Thirty years of a Liberal middle-class era would have relieved 
Germany’s internal political tensions (the result of a too-rapid 
industrial development), and attracted a stream of political leaders 
from the ranks of the middle classes. 

It was in 1888 that I heard the word “cancer” (Krebs*) for the 
first time. The Emperor Friedrich, it was said, suffered from cancer 
of the larynx, but we had no idea what that implied. 

Nowadays every child knows the meaning of the word “cancer”. 
I remember that the dread, ominous word stuck in my mind for a 
long time, I would have liked to know what the “crab” in the 
Emperor’s throat looked like. 

The year began with the publication in the newspapers of daily 
bulletins concerning the bad state of health of His Majesty the 
Emperor Wilhelm. The grown-ups looked very grave when they 
read these bulletins. Wilhelm was nearly ninety-one when he died. 
When, ten years previously, the attempted assassination by the 
anarchist Schilling failed, the love of an entire nation went out to 
the (then) eighty-year-old ruler. His military past (a thorn in the 
fiesh to many a democrat) was forgotten, as was his action against 
the German Revolutionaries of 1848. People saw him for what in- 
deed he was — ^no genius, but a Patriarch on the Imperial Throne, 
a moderate, wise old man who knew very well how to follow the 
counsel of men whom he trusted. When he died in March 1888, 
and our school flag was lowered to half-mast, the whole nation 
mourned him. The Emperor Friedrich III succeeded his father on 
the Throne ; my father had great hopes of him. 

At that time I understood nothing of politics. Everything seemed 
to me wonderfully arranged: when one Emperor died, another 
succeeded him. Obviously Emperors never died out. But I 
remembered a talk I had with father one summer evening in that 
year. As usual we were all sitting around the table; outside, the 
sky was aglow with the colours of the sunset ; in the kitchen we 
could hear mother busying herself with the crockery she had just 
cleared away. 

“Bad news from Berlin,” said father suddenly to Eddy and me, 
“The Emperor’s cancer of the larynx is worse — ^they say it’s 
incurable.” 

“Who will come to the Throne then?” I asked. 


* Krebs, a crab; also cancer. 



^3 My First Seventy-Six Years 

Father took the opportunity to read us a little lecture on the 
Hohenzollern laws of succession, with excureions into the laws of 
succession of European dynasties. Suddenly he broke off short and 
stared out of the window ; obviously he had forgotten what he had 
been talking about. 

“Too late,” he said suddenly, “much too late.” 

“What’s too late?” we asked. 

“The Emperor Friedrich came to the Throne too late,” said 
father. “The old Emperor was ninety years old. Couldn’t he have 
retired fifteen years ago ? Even then the Emperor Friedrich would 
have been over forty — just the right age for an Emperor.” 

A few days later flags were once again at half-mast : the Emperor 
Friedrich too was dead. He had reigned for ninety-one days. 
Within a year a third Emperor sat on the Throne — ^Wilhelm II. 

The event aroused much comment. “Three Emperors,” said 
the optimists. “Just see what we can do ; if need be, we can produce 
three Emperors in one year.” The pessimists did not regard this 
fateful year as serving to establish Germany’s strength. Their 
remarks were, in the main, very similar to my father’s. 

This time there was no need for anxiety about the new 
Sovereign’s health. True, some of my schoolfellows hinted that 
the Emperor had one arm shorter than the other, but the pictures 
that now appeared in all the bookshops showed him as an exceed- 
ingly well-set-up, personable young man, a knight Sans peur et 
sans reproche with shining eyes and a fine dark moustache, He had 
the typical Hohenzollern high, somewhat sloping forehead and 
round his neck he wore a gold chain with cross and crown. I 
looked at him with the mercilessly sharp eyes of youth and decided 
that I liked him better than his father and grandfather. I said as 
much to my father one day at dinner. He raised his head and looked 
at me a little mockingly. ‘ ‘ So — you like him I ” he repeated. ‘ ‘ Well, 
well, he might almost be your elder brother!” 

That was an exaggeration. Wilhelm II was twenty-nine when 
he ascended the throne. Only much later did I realize that twenty- 
nine is very young for a responsible position such as that assumed 
overnight by the man with the smart military moustache. 

One of the young Emperor’s first official acts after his accession 
was the laying of the foundation stone of the extension to the free 
port of Hamburg, by which Hamburg was included in the North 
German customs union. 

Up to the year 1888 Hamburg was foreign territory from the 
customs point of view. For her inhabitants this was most advan- 
tageous, for all food from overseas came into the city at cheap 



Three Emperors in One Year 43 

international competitive prices. But it was bad for trade, for the 
vast purchasing power of the German Empire was difficult to 
tap owing to high tariff walls. The great mass of the popula- 
tion engaged in commerce and industry or in transit-trade could 
not profit by the low food prices if they were unable to earn the 
necessary money by adequate production and sales. 

Of course everyone, including the Prussian neighbours, exploited 
the exemption from duty to the full. Small quantities of goods were 
allowed to be brought in duty free from the Free Zone to the 
customs district in the course of so-called small-scale frontier 
traffic ; and the adjoining Prussian towns Altona and Ottensen took 
advantage of this. Whenever we children visited an aunt in Otten- 
sen we had to join a shopping queue of neighbourhood children 
who wei'e going to buy things at the nearest grocer’s shop in 
Hamburg. Then, after we had done our shopping we would march 
back proudly in single file through the dividing line of posts to the 
customs officials, each one showing the quarter-poimd of coffee, 
sugar, tea, etc., which we were allowed to take in free of duty. We 
saw nothing queer in this procedure, nor had we any idea of the 
economic pros and cons of the much-discussed customs problem. 

Uncle Wieding, however, had a very clear idea. (He was an 
old family friend whom we had “adopted” as an uncle.) Uncle 
Wieding had once wanted to marry a member of the Egger family 
— ^my mother’s sister Antoinette. But she turned him down and 
married instead the Danish Councillor of State, Oersted, a nephew 
of the famous professor of physics. Uncle Wieding never quite 
got over the disappointment. Being of an entirely guileless and 
kindly disposition he took on the part of a favourite uncle to the 
children of his idol’s sister. He often came to see us, took a great 
interest in the children’s progress, presented us with apples and 
cookies which he invariably extracted from his coat pocket directly 
he entered the house, addressed mother as “little woman” and 
carried on lengthy discussions with my father. Their pet subject 
was literature and “all the latest”, a homely expression used by 
the Hamburgers of those days to describe what we, somewhat 
more sophisticated, now speak of as “community affairs”. 

Uncle Wieding was an independent shopkeeper and dealt with 
English stockings and knitwear. He was a model of probity, well- 
educated and kind-hearted, but he was also one of those strictly 
logical sensible folk who find it hard to understand that people do 
not always act according to the dicatates of reason. As a result he 
belonged to the Liberd political party, i.e. to those people who 
are sound enough in theory but in practice seldom have a large 
following. For the masses don’t look on things as they should 



44 My First Seventy-Six Years 

be in theory but us they strike them in reality. The theoretically 
correct, however, is seldom striking. The striking thing is the 
extreme, the extravagant, whatever lies outside the domain of 
logic, reason and convention. 

The inclusion of Hamburg in the German customs union was 
the first important political event of my life. For Uncle Wieding 
however, it was a financial blow. His English stockings were more 
expensive owing to the duty ; they had to stand up to competition 
from Saxony. Nevertheless Wieding swore by his English hosiery. 
He found fault with the “inferior” imitations from Chemnitz but 
could not prevent their growing better every year and finally 
surpassing the English goods in quality and appearance. Uncle 
Wieding’s business steadily declined. Eventually he made up his 
mind, and notified his customers that Julius Wieding’s were closing 
down for good; he didn’t want to strike out on any new lines. 
Henceforth he lived on his income and his principles — a modest 
but contented man. 

By a stroke of luck I managed to get a good place for the cere- 
mony of laying the foundation stone of the free port. The father 
of one of my playfellows was a wholesale butcher living in a road 
known as “Bei den Miihren” between the Inner Harbour and the 
Customs Canal. We had a fine view of the scene of action from a 
platform erected above the front steps of the house. The shop was 
much patronized by the dockers. Every afternoon between four and 
five the butcher would tie a clean blue-and-white apron around his 
iriiddle, pick up a big dish of sausages and carry them through to 
his customers in the shop. From the living-room we could see and 
hear him selling his hot sausages and joldng in dialect with the 
workmen. 

“Bei den Muhren” is a romantic corner of old Hamburg. 
From the Old Wall the Burstah runs down to the wooden bridge 
over the Nicolwfleet, and continues as the Mattentwiete to what 
was then the bridge over the Sandtorkai, which, with the Brook- 
torkai, lie further behind the harbour. Sea and land dovetail into 
each other at this point; everywhere are quays, moles, bollards, 
barges, boats, old hulks and little pleasure-steamers. 

On the isth October 1888 the Emperor Wilhelm II was to lay 
the famous foundation stone in the corner tower of the Sandtorkai 
bridge. One can pictime the excitement of a fourth-form schoolboy 
over all the preparations. I wasn’t in the least interested in the 
continual arguments of the grown-ups over the harbour. The chief 
thing was that a real Emperor was coming and I should see him 
quite close! 

Hours before the actual ceremony people were crowding in the 



Three Emperors in One Year 45 

direction of the Mattentwiete and the inner streets of the Old 
Town so that they might at any rate see the Emperor of Germany 
drive past : middle-class citizens in dark suits, leading their children 
by the hand ; their wives, with umbrellas, walking beside them. 

At last we caught sight of the guests of honour in frock-coats and 
top hats. Distant cheers; the clatter of hooves over the Matten- 
twiete; then a carriage drawn by four horses, in which sat the 
twcnty-nine-year-old Emperor, in full-dress unform. He bowed 
gravely and waved to right and left. 

I can’t remember any of the speeches of that afternoon ; I was 
completely taken up with gazing at the Emperor, standing erect 
and very serious in front of the Sandtorkai bridge and probably 
rather astonished at the weird street names and the queer, harsh 
German spoken by his hosts. I was deeply impressed by his smart 
uniform and his whole appearance. 

At last all the speakers had voiced their good wishes for the 
future, emphasized the importance of this historic occasion, been 
mindful of the Reigning House, the old Hanseatic city, and many 
other things besides. Someone handed the Emperor a hammer; 
he took it, raised it and let it fall three times on the stones which the 
foreman had set in the tower on the bridge. 

Those three strokes remained in my memory for years. From 
the moment they had sounded, Hamburg had surrendered her 
old right of exemption from duty and had become incorporated in 
the larger Union — eighteen years after the war with France, out of 
which the Empire had arisen. 

A few minutes later the Emperor re-entered his carriage, bowed 
right and left and drove away. The great event of the year was over. 

From that day onwards I looked upon the world with different 
eyes. There is a vast difference between just hearing about an 
Emperor and actually seeing him in the flesh. Power is an empty 
word until one has seen a display of power. Such a display was the 
laying of the foundation stone in the free port of Hamburg. I 
suddenly grasped the meaning of the word “ Politics ”. I began to 
understand why my father read newspapers like the Fremdenblatt, 
the Correspondent or the Nachrichten: I understood, too, why 
people like Uncle Wiedmg grew excited when they discussed 
politics. I had made my first contact with a wider world. 

To understand the after-effects on Hamburg of the , solemn 
occasion one need only to follow the history of a single shipping 
firm. 

The Hamburg-Amerikanische Paketfahrt AG, (HAPAG for 
short), founded in 1847, had had to reduce their capital of 



46 My First Seventy-Six Years 

22,500,000 marks to fifteen million in 1877, having over-committed 
themselves in competing with the Adler Line. In 1886, two years 
before the free port celebrations, Albert Ballin took over the 
passenger traffic. He was a most gifted man, son of a Jewish ship- 
ping agent engaged in the booking of passages for emigrants. 
But even Ballin himself could not, single-handed, have built 
up HAP AG into the mighty establishment it became during the 
ensuing twenty-four years. 

The year 1891 saw the beginning of HAPAG’s fast weekly 
service to New York and the inauguration of winter cruises for 
tourists. In 1894 were introduced the great P-liners (all the names 
of these vessels began with P — Prussia, Persia, Patria, Phoenicia, 
Palatia, etc). These steamships were built for both freight and 
passenger traffic. 

Between 1897 and 1900 HAPAG bought up the Hamburg- 
Calcutta Line, the Hamburg-Kingsin Line and the shipping firm 
of de Freitas with a Brazilian Line. In 1900 the new fast liner 
Deutschland, 23 • 5 knots, was put into commission, to which were 
added in 1905 freight-and-passenger vessels of the Kaiserin 
Augusta Victoria class (25,000 tons displacement). 

In the last few years prior to the first world war the three 
giants of the Imperator class followed in quick succession Imperator, 
Vaterlemd and Bismarck, each one over 50,000 gross register tons. 

The number of ocean vessels of this one Line alone had risen 
from twenty-six to one hundred and ninety-four, the gross 
registered toimage from seventy-one thousand to one million, 
three hundred and sixty thousand. Instead of half a million 
cubic metres of goods the annual purchases now amounted to eight 
million, three hundred thousand cubic metres, and instead of 
forty-eight thousand passengers a year the liners now carried a 
total of four himdred and sixty-three thousand — ^nearly ten timoa 
as many. 

I made the acquaintance of Albert Ballin, who had been 
President of HAPAG since 1899, during the first world war. Two 
years later, following the German collapse, he took his own life. 

The tremendous advance and growth of Hamburg, due to its 
incorporation into the Empire, was soon apparent to everyone. 
International trade, industry and self-government was now the 
threefold slogan that made of the Hanseatic city on the northern 
bank of the Elbe the second largest town in Germany, and one of 
the largest ports in the world. 

AYhen, four years later, the Equitable decided to transfer its 
offices firoin the Hanseatic Hamburg to the imperial capital 
Berlm, my father moved there also. 



Three Emperors in One Year 47 

That was the beginning of a new chapter for all of us — for 
father and mother, because they had to accustom themselves to an 
entirely new kind of life, for me, because I made up my mind to 
stay on at the Johanneum in Hamburg and for this purpose found 
board and lodging with a doctor’s family in Wedel, the other side of 
Hamburg. 



CHAPTER FOUR 


Cholera in Hamburg 

T he removal van containing the furniture, kitchen utensils, 
and soon, had departed, drawn by hefty iron-grey Percherons 
with funny tufts of hair on hooves and belly. Father, mother 
and Oluf had left by the Flamburg-Berlin train; brother Eddy 
was studying medicine in Kiel and fully occupied with anatomy, 
jolly companionship and attractive blondes. I remained behind in 
Wedel, near Hamburg. 

Every morning I went into Hamburg by steam-train — an hour 
and a quarter’s journey — and returned in the evening. From the 
windows of my compartment I could see the magnificent villas in 
Blankensee belonging to various shipowners, and the white sails 
of the yachts cruising on the Lower Elbe, 

In spite of the view, however, I was not really happy because of 
the mistress of the house my parents had chosen for me. She was a 
miserly woman, stepmother to the two daughters of a somewhat 
corpulent doctor, a friend of my father’s student days whose first 
wife had died many years previously. 

When my parents moved to Berlin they took the doctor’s eldest 
daughter with them and I went to board with the family at Wedel 
so that I could continue to attend the johanneum. From this 
exchange of offspring there sprang up a staunch friendship between 
my “foster-sister” and myself which has endured to this day. 

There was nothing wrong with the doctor. He was an easy-going 
sort of fellow who asked nothing better than to get into his pony- 
trap and drive off on his rounds. If I were at home he would often 
ask, “What about it, Hjalmar — feel inclined to come along?” 

I always felt inclined, so the two of us would drive all oyer the 
place. 

“It’s not comfortable at home,” he would sigh, when we came 
to an attractive looking pub. “Come along, let’s have a grog.” 
We would have one — or several, according to how we felt — and 
then drive on again. 

His wife never bothered 'herself about me, but I put up with it. 
I was now in the upper school, the masters addressed me in the 
third person, as is the custom in Germany among adults ; in addi- 
tion to compulsoiry I^atin and Greek I had chosen Hebrew as my 



CJiolera in Hamburg 49 

optional subject. I did not know whether I would ever go in for 
theology, but a variety of subjects never does anyone any harm — 
and later on we would frequently say — ^in fun — ^that the Hebrew 
language was by no means a bad preparation for a banking career. 

Sometimes, it is true, I would be fed-up with conditions in the 
doctor’s house ; on the other hand there was a magnet which kept 
me there — ^the youngest daughter. 

She was not my first love. I had got over that in my Obersekun- 
daner (upper fifth) days. My first love had been a cousin in Lower 
Saxony whom I had met at a wedding at the age of fifteen. I 
liked her so much that six months later I set out on a thirty-three 
mile walking trip in order to see her again. 

The doctor’s daughter was a somewhat different story ; my feel- 
ing for her could best be described as platonic. I wrote verses for 
her and kept my efforts hidden in a drawer. My thoughts wavered 
between her and the bicycle I intended to earn by private coaching. 
But before I could do anything about it the great Hamburg 
cholera epidemic broke out and put paid to all my plans. 

Nine years previously Robert Koch — ^whom Germany at that 
time had honoured as a hero — ^had discovered in the comma bacillus 
the cause of cholera. 

Now there is a vast difference between seeing a picture of a 
comma bacillus in the newspaper and seeing a whole town 
succumb to this pestilence. No-one in Hamburg imagined during 
that summer that things were not all they should be. Evidently, 
however, some traveller from India had brought the cholera 
bacillus with him and it spread throughout the city. In matters of 
sanitation the Hamburg of those days was very much behind the 
times. Crowds of human beings huddled together in the Old 
Town: ancient tenement dwellings, often with only one or two 
lavatories in the basement, inadequate drainage — ^refuse was mostly 
carried straight into the Elbe without any provision being made for 
soakaway or sewers — ^in short, first-class ground for an epidemic. 
More than ten thousand Hamburgers fell victims to the defects 
of a one-sided administration which gave too much attention to 
business and too little to the welfare of the community. Between 
the great conflagration of 1842 and the Allied bombings of 1943, 
no other catastrophe of comparable dimensions had befidlen 
the city. 

The frightful part of it was the sudden spread of the epidemic; 
it was like an explosion. Only yesterday I had gone to town by 
train from Wedel, had written a Greek extempore exercise, and 
in the afternoon had returned to my doctor’s house without the 



My First Seventy-Six Years 

remotest idea of the ghastly danger to which, at that very moment, 
thousands of people were already exposed. The next morning L 
packed my school satchel, stuck my blue cap on my head and made 
my way over the uneven cobbles to the railway station. The 
stationmaster looked at me and beckoned me nearer. 

“Well, Schacht, I suppose you want to go to Hamburg.?” 

“Yes”, I said. 

“Well, you can’t”, said the excellent fellow. 

“Why not?” I asked. 

He leaned forward slightly and his expression became very 
grave. “Cholera has broken out in Hamburg”, he whispered. 
“All schools are closed till further notice. We have had instructions 
to send back any students coming into the city from outside.” 

I picked up my satchel and went right back. 

“What shall we do now?” I asked the doctor. He glanced first 
at his wife, then at me. I took the hint, went to my room and packed 
a bundle not much larger than a Hamburg carpenter’s knapsack. 
Then I went downstairs, made my farewells and said I would 
return when the schools reopened. My address was c/o Dr. Schacht, 
Friedrichstadt ; would they please write to me there if they heard 
any news about the school. 

Soon afterwards I was stepping out in the direction of Utersen. 
By-passing Hamburg and the cholera I wandered through the 
countryside, past rich pastures and poor-conditioned fields, past 
marsh and high ground. The knowledge that I would not have to 
go to school for a few weeks outweighed any feeling of horror at 
the calamity that had overtaken the city. Youth is very selfish and 
self-centred. 

It was, in fact, a terrible calamity. The civilian and the emergency 
military hospitals were very soon full to overflowing with the 
dying. A constant stream of mothers with children, daughters with 
fathers, husbands and wives, thronged the auxiliary and advisory 
centres asking for help which those in authority were often unable 
to give. Residents in whole streets fell ill where contaminated 
water had seeped in through the defective pipes, while in the next 
street not a single one sickened. Unsuspected carriers may well have 
been responsible for the fact that in streets and districts where 
hitherto not a soul had succumbed, new centres of the disease 
suddenly developed and spread like vrildfire. (Nowadays these 
suspects would have been “pulled in” and quarantined at the 
first sign of an outbreak of cholera or typhus.) Relief trains were 
assembled and despatched from Germany; young doctors from all 
over the Empire poured into Hamburg and threw themselves with 
sublime courage into the fight against the Asiatic foe. Voluntary 



Cholera in Hamburg 

hospital nurses from the big charitable organizations offered their 
services. Many of them sickened; not a few died. 

The epidemic lasted three months. It took six weeks before 
matters were sufficiently under control to admit of the schools 
reopening. Meanwhile ten thousand Hamburgers had perished 
from cholera. During those six weeks I stayed with my grandfather 
in Friedrichstadt. 

From titersen I travelled by a branch line to Tornesch at the 
beginning of the main stretch of the West-Holstein Marsch line. 
There I waited some hours for my connection and it was late 
evening when I arrived at Friedrichstadt on the Eider. 

It was like coming home. I had already stayed with my grand- 
father twice — once when we still lived in Husum and the second 
time after we had settled in Hamburg, when I was twelve years old. 
I knew that in the interval my grandmother, whom I had admired 
immensely, had died. But grandfather was still alive and, in spite 
of his seventy-nine years, active and unchanged. 

* ‘ Ah, there you are, my boy * was all he said by way of greeting. 
That was t3rpical of the prevailing tone in our family. The Friesians 
are a taciturn race, fully occupied with the realities of life. If a 
member of the family turned up he had his own reason for doing 
so. There were no lengthy enquiries. 

The housekeeper prepared a room for me and looked suspi- 
ciously at the small amount of underlinen I had brought. I had a 
wash and ran downstairs to grandfather who was waiting for me 
at the supper-table. Of course I immediately told him about the 
cholera. He was not happy at the news. To begin with, he was a 
doctor and it did not take much imagination to picture what a 
cholera epidemic meant in the narrow dirty quarters of old Ham- 
burg. Then, too, he feared that fear of the sickness would mean a 
lot of extra work for him. And he was right. 

Friedrichstadt, situated at the junction of tlie Treene and the 
Eider, is only some fifteen and a half feet above sea-level. The 
Danish king, Frederick III, had allowed Dutch Arminians to 
settle there when they had repudiated Calvin’s doctrine of pre- 
destination. Later, other churches had joined them — Reformed 
congregations, Mennonites, Remonstrants. Elven Catholics who 
had been persecuted in Protestant countries, found refuge here. 
I can never forget the Sunday mornings when the air was filled 
with the sound of all the various bells calling the faithful to wor- 
ship. And no matter how greatly the preachers may have differed 
in their views, the bells all spoke the same language and were in 
harmony with one another. 



^3 My First Seventy-Six Years 

Frederick Ill’s humaneness had paid good dividends. Fricd- 
richstadt owes its Dutch character to those Arniinians — a character 
which has been preserved to this day: the dead-straight canals 
with their neat borders of stone or turf, the little bridges, the flower 
gardens and hedges. A further point is that Friedrichstadt lies in 
the middle of a real Friesian marsh setting. 

Never again have I so appreciated my North German home as I 
did during those six weeks in the Eider neighbourhood. 

Despite his great age grandfather was still a practising parish 
doctor. A year later he was appointed Medical Officer of Health, 
but he never knew what to do with the title. Medical Officer of 
Health — ^what on earth was a Medical Officer of I-Iealth? To his 
patients he was the parish doctor till the day of his death at the 
age of eighty-five. 

At sixteen one looks at the world with different eyes. What I 
had not realized during my previous visit four years earlier, I now 
felt very distinctly: this was my real home, and grandfather the 
connecting link between past and present. He was born in the 
year of the Battle of Leipzig and had witnessed the passing of 
almost an entire century. The whole toughness of his race showed 
itself in the way in wffich, unburdened by age, he handled his 
patients and, the day’s work done, would get into a rough tweed 
suit and stroll for an hour around the market-place with its many 
trees, smoking his long pipe and replying with good-humoured 
grunts to the greetings of his fellow townsmen. Sometimes I think 
I have inherited my own toughness from this same grandfather, 
although in my case there is dso a good dose of Eggers tempera- 
ment that my grandfather lacked. In all his dealings he was calm, 
very deliberate, never excited or upset. 

Of course I helped him in his practice. Much more interesting 
than sitting in my classroom at the Johaimeum and estimating 
third-dimension curves. Above all, it was more human. 

For instance, a farmer would turn up during surgery hours, 
obviously suffering from the very opposite of cholera. 

‘’Are thy bowels open?” Grandfather would aslc, having diag- 
nosed the trouble at a glance. And immediately the well-worn 
reply. 

“Yes, doctor my bowels be open all right, but there be nowt 
as comes outl” 

‘‘Well, I’ll write thee something”, grandfather would say, and 
scribble a prescription on his writing-pad for the farmer to have 
made up by his chemist. 

“What’s thy fee?” the patient would ask. 

Six groschen”, said grandfather. 



Cholera in Hamburg ^2 

Part of his duties as parish doctor consisted in keeping the 
territory at the mouth of the Eider clear of suspicious intruders 
who, under certain circumstances, might import the cholera from 
Hamburg. What steps he took I no longer remember. An essential 
factor was, however, his wide experience during his medical 
career. Although he certainly did not go to work according to the 
most modern methods, his district nevertheless remained free of 
the disease. 

I remember one day when a chubby-faced, red-headed cattle- 
dealer from Hamburg strode heavily into the consulting room. 
He was examined and given a clean bill of health. Somewhat 
relieved he took a deep breath, leaned co nfidin gly against grand- 
father’s writing-table and explained why he had been scared at 
this visit. 

“Tha’ll understan’, doctor,” he said, “I’ve come to do 
business.” 

Grandfather blinked slightly. “All right, carry on ”, he advised. 
“ But see here, mind what I’m telling you. It’s not easy to pull off a 
deal with our Eiderstedt farmers. Many a cattle-dealer has tried 
his hand at it and after a bit he has packed up and left. By then 
the farmers have had his cash and he has had his experience.” 

During my previous visits I had learned from grandfather some 
details of past family history. This time, however, I felt that he 
would welcome the opportunity of saying something about the 
province and the people to whom it gave birth. In the course of 
those six weeks I came by almost all the knowledge I possess about 
my family. Betweenwhiles, too, he was interested in my progress 
at school and asked whether I knew what I wanted to do. I said 
frankly that I hadn’t yet made up my mind. Perhaps I might go in 
for medicine like Eddy — ^perhaps something else. 

He didn’t worry. “We Schachts always mature late and live all 
the longer in consequence ”, he said. “You’ll find out soon enough 
what you want to do. The wise man takes his time !” 

I was much attracted by grandfather’s big bookcase where I 
discovered a complete edition of Hebbel's plays. We had studied 
some of them at school — ^not surprising since Hebbel’s first work, 
Judith, had been written in Hamburg. Grandfather noticed the 
book in my hand, looked over my shoulder and tapped the pages 
with the mouthpiece of his long pipe. 

“I knew him well”, he said. 

“Who? Hebbel?” I asked incredulously. 

He nodded. “Certainly. He was the son of a mason in Wessel- 
buren — between Biisum and Heide. At, that time I was doing my 



My First Seventy-Six Years 

year’s practical training in pharmacology at the chemist ’s in Wessel- 
buren and occasionally went home on Sundays. I came to know 
Hebbel during that year — he was writing church plays in Wessel- 
buren, poor chap. He was very keen to learn Latin so that he could 
read the Latin authors, and I gave him lessons for nearly a year.” 

“You gave Hebbel Latin lessons?” 

Once again he nodded. “Nobody so much as mentioned his 
namft in those days,” he said, “and nobody would have believed 
that he had a future. Poor devil, he was ambitious and full of 
queer stilted expressions. But clever — ^very clever. Later on 
Amalie Schoppe, the Hamburg authoress, took him back with her 
so that he might have a chance of fitting himself for real study. 
And study he did, but I don’t think he was ever really happy. He 
was one of those people who think they can do everything. But 
that doesn’t work. Look at our family — ^it took two generations to 
turn me into an ordinary G.P. That’s the way of the world. But 
Hebbel wanted to get there all at once. He often used to write to 
me — ^his letters were a bit stilted and queer — ^he was like that. But 
very, very clever. And a great dramatist.” 

I never would have thought that my somewhat dry old stick of a 
grandfather could have been so closely connected with poetry. 
Where were those letters? Had he kept them? 

“They’re somewhere among all the junk in the attic. You can 
look for them if you like. I haven’t thrown them away.” 

I climbed up to the loft and hunted through the old boxes and 
chests. There were packets of letters in now faded ink. At last I 
found what I sought. Friedrich Hebbel’s letters to my grandfather 
written when my grandfather was studying in Copenhagen. They 
were the same age. 

I found the great dramatist’s letters to my grandfather deeply 
moving. It must be remembered that when he wrote them Hebbel 
was a completely unknown young man with visions of the great 
outside world, but no prospects. Nevertheless his letters contain 
sentences such as the following, which became my guiding star: 

If we cannot be together, if I am engulfed in the widest of circles 
and you in a narrow one, I shall yet leave a true and faithful impress 
of my whole being in works of the heart and the intellect, and you 
will always be a welcome guest at this repast — ^perhaps not an 
unwilling one — ^the more so, maybe, since you will have known the 
tree while it was still in the bud and have experienced its sharpest 
(though purest) flavour. 

Grandfather must have noticed that I set particular store by the 
letters and also by a copy of the IHthmcarschm Messenger which 



Cholera in Hamburg 55 

contained the first contributions from Hebbel’s pen and which I 
had likewise discovered in the attic. So when one day I received a 
letter from the Johanneum saying that they had resumed activities, 
he made me a present of everything I had found. I thanked him, 
packed my traps, said good-bye and went back to Hamburg. The 
old gentleman remained standing in the doorway in his tweed 
coat, his long-stemmed pipe in his hand. I never saw him again. 
Six years later he was found dead in bed. The pipe had fallen from 
his hand and was still alight. 

I returned to Hamburg where many men wore mourning bands 
on their arms and many women black veils. In the city great dis- 
cussions were in progress ; the Senate was blamed for not having 
troubled sufficiently about the well-being of the inhabitants. 

In the home of my Wedel doctor I found the pretty daughter, 
the stout papa and the scraggy stepmother. Once again short com- 
mons were the order of the day. I thought longingly of grandfather’s 
good table, the big joints with their crisp craclding, the flat hot 
scones for breakfast, the sole, brill and turbot that his housekeeper 
used to fry in butter. 

I resumed my studies and gave private lessons. At last I had 
saved enough to be able to collect the bicycle I had ordered. It 
cost me two hundred and fifty marks, a tremendous sum in those 
days. It was not so long since my mother had kept house for more 
than a month on that amount. But the world was on the up-grade, 
money was plentiful everywhere; “progress” was the watch- 
word, earnings increased from day to day. The manager of the 
bicycle shop wrote in his order book: “Hjalmar Schacht, student, 
saved the money for his bicycle by private coaching.” I could not 
dream that the firm would one day dig out this old book and pub- 
lish that entry as a good advertisement for the business. But that 
was not until 1936. 

Any cotmtry-lover will realize what a bicycle meant to a sixteen- 
year-old boy. I went for long rides to Lower Saxony and Mecklen- 
burg, up and down the Elbe. Then came the winter, and even my 
bicycle could not make up for conditions in the doctor’s house at 
Wedel. My room was never heated, my intake of calories was insuf- 
ficient. My exasperation was increased by the fact that every 
morning the washing-water was solid ice. My country drives with 
the doctor became more and more, frequent and many were the 
prolonged sessions and talks we enjoyed over steaming glasses of 
grog. 

My liking for grog dates from that time, and the doctor’s grey 
horse seemed no less appreciative of the intervals afforded by our 



^6 My First Seventy-Six Years 

visits to the bar-parlour. If, in the course of his rounds, the 
doctor attempted to pass a village pub, the good creature refused 
to let him. Ignoring the reins, he would turn in at the entrance and 
there was nothing for it but to get out and have a pint. My doctor 
was a witty fellow with bright ideas, and during our drives together 
he was always in the best of tempers. 

“What’s the difference between high land and marsh land?’’ 
I asked him on one occasion. 

He winked. ‘‘I’ll tell you, my dear student,” he said. “It’s like 
this. If I drive down there through Hetlingen and my grey drops 
something, not a soul bothers about it. But if that happens up at 
Holm, a farmer’ll come rushing out of the house, one on each side, 
with broom and shovel, and yell: “Yon’s my bit of dung!” 

I took advantage of the long winter evenings to write pages of 
verse to my adored one, the doctor’s daughter. All in vain. The 
heartless girl refused to take me seriously and made fun of my 
poems. One day she seized her chance and locked me into a certain 
outside apartment. That was the last straw. I saw no reason to 
remain any longer in that house, gave notice — ostensibly because 
of a mouldy cheese-rind that my hostess had put up by way of 
sandwich for school lunch — and left. From one of my acquaint- 
ances I had heard that a clockmaker and his wife living in St. 
George’s were willing to board a grammar-school boy. 



CHAPTER FIVE 


A Meeting tmth Bismarck 

A LTHOUGH nowadays grammar-school pupils in the top 
forms have to tackle the differential calculus and organic 
J. Vchemistry, I don’t believe that we sixth-formers had an 
easier time. In my day the school set especial store by the behaviour 
of the older boys. They were people of importance and were 
expected to behave as though they were already grown up. 

Grave, stiff, dressed in dark suits, with white silk caps on our 
heads, we made our way daily to the vast building on the Speersort, 
But our gravity was sometimes deceptive. This became apparent 
when our old headmaster, Hoche, was succeeded by a new man 
who was to have the effect of a fresh breeze on the somewhat 
leisurely ways of the school. The new head, Schultes, was a first- 
rate man, only a bit too keen. The upper forms, which had grown 
large under Hoche’s rule, were thoroughly riled by his keenness 
and determined to get their own back. There was to be a “binge” 
for the 1893 top-formers who had passed their leaving examina- 
tion. At this party a Biersseitung — a humorous gazette specially 
got up for the occasion — ^was read out. In it the “Muli” (the 
nickname given to tlie school-leavers after the examination 
and before they entered the university) unmercifully “guyed” 
their school and their headmaster. The new head took the whole 
tiling in the virrong spirit and left the gathering, obviously deeply 
offended. 

Personally, I got along very well indeed under Professor 
Schultes. My interests were many and varied, particularly in the 
realm of intellectual subjects, as well as contemporary history, 
geography, languages and literature. Schultes liked that. He en- 
couraged his pupils to tackle unusual subjects. Occasionally, when 
he asked a question that had nothing to do with the subject, he 
would look at me through his spectacles and say: “Come along, 
Schacht, you know it!” Sometimes I knew the answer. Then he 
would grin with satisfaction. We got along very well together. 

During those years I also learnt a lot from Uncle Wieding, 
whom I often used to meet on Sundays, We would go for a stroll 
along the river or forsake the town in favour of a country walk, 

3 



My First Seventy-Six Years 

As a young man Uncle Wieding — a native of Hamburg — had 
fought in the Battle of Idstedt. There cannot be many today who 
Imow what this battle was about. It decided the outcome of the 
fight between Schleswig-Holstein and Denmark. The Prussian 
General Willesen was beaten by a superior Danish force and com- 
pelled to retreat. All this happened near the little village of Idstedt 
on the main road between Schleswig and Flensburg. 

Uncle Wieding had fought on the losing side. But before the 
battle had been completely lost he had done something that millions 
of others have done before and since: he had shot a Dane and 
killed him. 

He took this incident deeply to heart. He was a civilian and a 
townsman through and through, and had not bothered his head 
over what might be expected of him once he was in uniform. 
Then came the Battle of Idstedt. Uncle Wieding, fighting-mad like 
the rest, overcome by the general lust of battle, raised his rifle and 
fired. 

“ I saw the Dane I was aiming at. I saw my bullet hit him, saw 
him fall and lie there — dead. And in the same moment I realized : 
‘You have killed a man, another human being, made in God’s 
image — ^like yourself.’” 

Uncle Wieding would never have killed a man of his own free 
will. He was inoffensive, good-natured, always ready to come to the 
aid of man or beast. What kind of uimatural mental confusion must 
have occurred to make such a man kill another in the heat of battle ? 
What kind of a battle was it anyway? 

In spite of Uncle Wieding’s shot the campaign was lost — ^but 
even after this sacrifice of blood and tears the frontier between 
Germany and Denmark was not really settled. It was perpetually 
being shifted about by politicians — ^and it may continue to be 
shifted about, even now. 

I don’t think many men looked upon international history from 
the same standpoint as Uncle Wieding. Certainly Uncle Hermann 
Eggers, the first lieutenant, had no qualms of conscience whatever 
over the enemies he had despatched during the war of 1870, 
People were beginning to envisage great things — ^technical progress, 
international markets, monster fleets and huge stocks of raw 
materials. 

Ever since those walks with Unde Wieding I have, for my own 
part, repudiated the idea that the problems of this world can ever 
be solved by violent methods. 

There is frequent mention these days of “lost generations”. 
The first lost generation of niodem times were undoubtedly the 
Liberals who were done out of their opportunities, thanks to the 



A Meeting with Bismarck 55 

events of the fateful year 1888. Among these Liberals I include 
Uncle Wieding. 

To my sixth-form period belongs also another meeting — ^this 
time with a man who was in every respect the complete antithesis 
of my gentle uncle. I can remember the torchlight procession 
staged by us older boys on the ist April 1893 in honour of the 
venerable Prince Otto von Bismarck. 

Since the construction of the Free Port and the customs 
union with the Empire had turned out so advantageous for 
Hamburg, the inhabitants entertained a deep and warm respect for 
the Chancellor, which increased still further when Wilhelm II 
tactlessly dismissed Prince Bismarck in 1890. 

Bismarck was seventy-eight years old on the ist April 1893. For 
fifty years he had been a master of politics such as there has never 
appeared since. He had created the Empire of which we were a 
part — backed up by an Emperor who had never let him down. 

The forma who were to take part in the ceremony had already 
left by steamer for Friedrichsruh in the afternoon, each member 
armed with a torch of pitch-pine. As dusk fell on that spring even- 
ing they formed fours and made ready to march off. I was class 
orderly at the time and as such was responsible for leading my 
section — ^I think it was the only time in my life that I held a semi- 
military rank. The original plan had been to give the orderlies 
magnesium torches, but later this idea had been discarded as 
the white glare of these torches would have dazzled the old 
gentleman and spoilt the general effect. So it came about 
that in addition to my pitch-pine torch I had an unlit one of 
magnesium. 

At last it was dark enough, and the huge procession of school- 
boys, like some gigantic serpent, moved off towards the Friedrichs- 
ruh entrance gate. The torches were lit, and the millipedic column 
tramped across the CTavel. 

I glanced back andsawthe faces of my schoolfellows enveloped in 
smoke, illuminated by the flickering red light of the pine branches. 
Then I looked ahead of me and saw the Chancellor. 

He was wearing the uniform of the Halberstadt Cuirassiers, and 
stood erect in the archway, his left hand resting on the pommel 
of his sword, while from time to time he raised his right hand in 
salute. On his left breast gleamed the Iron Cross, First Class; the 
buttons on his uniform reflected the light from the torches and the 
dark material was almost completely merged in the background. 

Someone behind me said “The Iron Chancellor” and I have 
never been able to forget the description. There he stood, drawn 



6o My First Seventy-Six Years 

up to his full height, tightly wedged into his uncomfortable uni- 
form; a deep furrow between the bushy eyebrows; his asymmetri- 
cally-shaped eyes under their heavy lids fixed keenly and earnestly 
on the schoolboys. 

I was to see many a picture of him in later years, but none ever 
came up to that picture engraved in my memory. 

A tremendous solemnity emanated from the old man, as though 
he alone foresaw how onerous and dark the future would be, how 
little reason there was to look forward hopefully to the coming 
century. Many decades later, when the significance of that era had 
become more apparent, I recalled again and again the penetrating, 
grave expression of the Chancellor’s keen eyes. What had he tried 
to tell us by that look ? A duty, a warning, a plea that we should not 
allow his work to be carelessly destroyed ? 

That same evening I returned to Wedel from Blankensee. The 
last suburban train had left long before we arrived back in Ham- 
burg: an hour and a halfs steady tramp lay before me. 

I trudged along by the Elbe, absorbed in recollection. I was not 
thinldng of the Emperor Wilhelm II who, only a few years ago, 
had struck me as being so smart and well turned-out ; nor of genial, 
kind-hearted Uncle Wieding: I could think of no one but Prince 
Bismarck. 

For a single instant, in my position as orderly, I had had the 
feeling that the old man had been looking at me done, that he and 
I were the only people there. It was only for an instant ; then I had 
passed by and others saw the Prince and doubtless thought that he 
looked personally at each of them. 

I longed desperately to do something to express my admiration 
for the Chancellor. Suddenly I felt a hard object against my arm ; 
I looked down and saw the unlighted magnesium torch. Following 
an impulse I felt for some matches, lit the torch and held it high 
above my head as I tramped along the high road above the Elbe. 

Below me ships sirens hooted, red, green and white lights 
blinked, propellers threshed water that hissed and foamed. I 
went on my way, paying an entirely personal torchlight tribute to 
Prince Otto von Bismarck, of which he would always remain in 
complete ignorance. 

The sailors on the Elbe may well have thought that a lunatic had 
been let loose and was endangering the river traffic with his 
idiotic torchlight. Well, let them! Those sailors on the Elbe can 
have had no idea how the heart of a sixteen-year-old schoolboy can 
be ablaze with hero-worship for an old man — a really great, grand 
old mam 



A Meeting with Bismarck 6i 

Two years later my form was preparing for the leaving 
examination. As the authorities did not want any failures, all 
doubtful candidates were warned in good time to enter their 
names for a date six months ahead. In this way all nineteen of us 
passed. 

As I have already mentioned, we were examined in groups on 
two successive days. Anyone who did well in a written examination 
was excused the viva. Luckily this happened wth my maths, test 
in which I was so successful in the written part that I passed— 
which gave me great satisfaction. In Hebrew, too, I was exempted 
from the viva. 

At last came the day when I found myself outside, my certificate 
in my hand. I went to the nearest telegraph office and wired 
home: “Passed leaving exam, successfully, Hjalmar.” Then I set 
about packing my things and sending boxes and trunks to the 
station. My nice clockmaker-people wept a little and congratu- 
lated me warmly. They said that in a few years’ time I should 
certainly be able to call myself Doctor. That, to them, was the 
essence of learnedness. 

I had no idea what I should be in a few years’ time. Fritsch, my 
form master, had asked me a few days before the examination 
what I thought of becoming. Rather wickedly I said, “A professor 
like you. Professor.” Fritsch, himself not lacking in irony, looked 
at me and shook his head, smiling: “I don’t see you doing that.” 

He was right — I never did become a professor. As yet I did not 
know what I wanted to be. But I had passed my leaving examination 
and was going to college. I was full of self-confidence and optimism 
while jogging back to Berlin in a fourth-class railway carriage. 

There, my enthusiasm was somewhat damped by my father who 
congratulated me on my success and added ^ily: “But you really 
needn’t have sent a wire. A twopenny postcard would have done 
just as well!’’ 

“Still, it is his leaving exam, William,” said mother. But 
father thought otherwise. 

“Rubbish I It was obvious from the first that my son would pass 
his exam. There was no need to rush oif and telegraph as though 
the skies had fallen.” 



CHAPTER SIX 


At the University 

W HEN myparentsfirstmoved to Berlin in 1892 they rented 
a house in Charlottenburg. A few steps from the house 
was a field where cows grazed and one could buy a glass 
of milk fresh from the cow for ten pfennigs (about fourpence). 
Today the Zoological Gardens occupies that erstwhile rural site. 

As soon as he could afford it my father built himself a little villa 
outside Berlin at Schlachtensee, which has long since been incor- 
porated in the capital. From there he went by train every morning 
to the Potsdamer Platz and thence to the corner of Friedrich- 
strasse where his insurance office was situated. 

He named his villa in Schlachtensee “Villa Equitable” after the 
Company. I still remember the flagstaff in front of the house with 
the American Stars and Stripes. Since he had acquired American 
citizenship while in New York, and at bottom was very liberal- 
minded, he took great pleasure in this little demonstration. 

Here I spent the Easter holidays in 1895 and discussed with my 
parents and Eddy what career I should take up. My mother would 
have liked to see me go in for theology, but I had little inclination 
for that subject. 

Eddy, in his fifth year as a medical student, persuaded me to 
follow in his footsteps. I was not altogether convinced that it was 
really my line but decided to have a shot at it. Thereupon my 
mother abandoned her objections ; perhaps she realized that it was 
useless to force a person to take up a career that fails to attract him. 

During the three years I had lived on my own in Hamburg (up 
to the time I left school) I had grown independent. The severe 
upbringing at the Johanneum had had something to do with it. 
My father was quite pleased. He made me a modest monthly 
allowance, and unlike many fathers, did not attempt to interfere 
with my plans for the future. Later, too, when I frequently changed 
from one faculty to another and tackled subjects that seemed to lie 
poles apart, he invariably displayed great understanding and let 
me go my own way. He was now a middle-aged man, less painfully 
thin than in earlieryears.His suits were of English cloth, his turned- 
up moustache was neatly trimmed, and he wore a pince-nez which 
he latet replaced by spectacles. 



At the University 63 

“Look around and choose whatever you feel is the right thing ”, 
he told me. 

So when the Easter holidays were over I mounted my bicycle 
and set out for Kiel with Eddy to register at the university as a 
student of medicine. Kiel, the capital of the province of Schleswig- 
Holstein, was in fact our home university. 

My parents remained in Berlin with the two younger ones. 
Oluf was a restless youngster, somewhat stubborn and not always 
straight. Unlike Eddy and myself he had dark hair and took after 
the Eggers side of the family. On the other hand, William, the 
youngest, was fair-haired and my mother’s acknowledged favourite. 
He grew up the best-looking and the most good-tempered of all 
her children. At that time, however, he was still a baby. 

Life at the university began differently from what I had ex- 
pected. Eddy was a devil-may-care young fellow, very intelligent, 
quite unmoved by “exam nerves” — and very much one for the 
girls. Now and again one of the charmers would deliberately set her 
cap at him and for the time being he would be in a tight corner. 
But it never lasted long. Eddy took life lightheartedly. 

Outwardly we were very much alike. When, for instance, he had 
made simultaneous dates with two girls he would send me to cope 
with one of them while he met the other, whom, presumably, he 
found the more attractive. 

I was reading histology and osteology (the study of tissue and 
bone) and beginning to tackle the structure and grovrth of the 
human body. But no matter how hard I tried I couldn’t work up 
any real liking for the subject. So long as we were content to pre- 
serve parts of tissues in paraffin in the histological laboratory 
lecture-room and cut them into the thinnest of wafers I could hold 
my own with anyone. But when it came to analysing our self- 
prepared specimens under the microscope and determiningwhether 
we were dealing with a longways or crossways muscular system, 
with mucosa or submucosa, then I gave up. Whichever way I 
studied it, one tissue looked just like another to me. 

I began to cast my eye in other directions. An old enthusiasm, 
to which I had given free rein while still in Wedel, reasserted itself : 
I began once again to write verses and, alongside the study of 
medicine, to delve into the history of literature. 

All this may sound rather confused. Actually, during my first 
years at the university, I experimented in all directidns until I 
finally decided on political economy. My working terms of six 
monihs each may be summarized as under; 

Summer iSgs: Kiel. Medicine, Germanic philology, history of 



64 My First Seventy-Six Years 

literature. Winter i8g5-g6: Berlin. Germanic philology, history 
of literature, journalism. Summer i8g6: Munich. Political econ- 
omy and Germanic philology. Winter i8g6-gy: Leipzig. Science of 
journalism, political economy. Summer i8gy: Bedin. Political 
economy, rhetoric. Winter i8gy-gS: Paris. French, sociology. 
Summer i8g8; Kiel. Political economy. Winter i8g8-gg: Kiel. 
Political economy. Simmer i8gg: Kiel. Reading for degree of 
Doctor of Political Economy, Doctor of Philosophy (M.A.). 

In four and a half years I attended five different universities; 
during the first seven terms I changed my university every term 
(every six months) and experimented with subjects that had little 
to do with each other. 

I have always envied those young fellows who have gone 
straight from school to the university, read half a dozen subjects 
and passed one or two examinations at lightning speed. Usually, 
after that final tour de force, they are finished, played out. Their 
ambition is satisfied; they are content to sink into a pleasant 
middle-class existence. They have proved that they are capable 
of satisfying the demands of our civilization. The only other 
time we hear of them is when their obituary appears in the 
newspapers. 

To know what one wants, and to be able to steer straight for 
one’s objective, it is necessary amid the many opportunities 
offered by a modern university to consult first-rate advisers, 
older friends and favourable connections, and I lacked all these 
things. I stood alone in the great hall and stared at the announce- 
ments on the blackboard : many of them conveyed some meanin g, 
others again conveyed nothing whatever. It took me a long 
time to discover in what department, which lecture-room and 
with which professors, I should find what I was looking for, I 
didn’t even know what I was looking for; I was feeling my way; 
I made mistakes, miscalculations. It took longer but the time was 
not wasted. 

It was a very jolly first term. One of my friends was a member of 
a wine-merchant’s family, whose father sent him a present of a 
small cask of Moselle. We took the cask, a basket of strawberries, 
sugar, some assorted drinking vessels and went by ferry to Heiken- 
dorf on the Bay of Kiel. There we bathed and afterwards made a 
magnificent strawber^ cup. When we boarded the last steamer 
from Heikendorf at eight o’clock none of us could walk straight. 
For some imknown reason I carried the empty cask under my arm 
and was quite determined not to let it go . The first thing some of us 
did when we reached Kiel was to take one of the crowd, who was 



At the University 65 

dead drunk, back to his digs. I stayed where I was, still carrying the 
cask, and leaned against a garden fence. Suddenly a bunch of 
youngsters emerged from nowhere in particular, crowded around 
and burst out laughing. Still leaning against the fence I began to 
laugh too. I had no idea what we were laughing at ; and it was only 
the next morning that my landlady enlightened me — the fence had 
just been freshly painted in bright green 1 My landlady had to 
remove the green zebra-stripes from my jacket with benzine, 
accompanied by some plain speaking I 

No less memorable was another trip that Eddy and I made 
somewhere about the end of our first month. We were both com- 
pletely broke and made up our minds to lookup our Uncle Hjalmar 
von Eggers, head of the sugar factory at Nykjdbing near Falster. 
We cycled via Eulin to Liibeck, boarded the steamer Omen for 
Falster and settled ourselves comfortahly, having only just enough 
money for fares. 

But the crossing lasted all night and we were hungry. Eddy went 
off to reconnoitre in the direction of the saloon and returned with 
the news that some excellent Danish smerbrod was to be had at a 
very reasonable price. 

“But we’ve only just enough for our fares ”, I objected. Eddy 
shrugged his shoulders. 

“Let’s eat, anyway”, he said lightly. “The captain is sure to 
know Uncle Hjalmar — she’ll stand us our fares till we get to Fal- 
ster.” That sounded right enough — after all, the captain couldn’t 
very well throw us overboard. 

We strolled into the saloon, ate smerbrod and drank beer. At last 
we were full, and our purses empty. We went to the captain, intro- 
duced ourselves as Herr von Eggers’ nephews and assured him 
that Uncle Hjalmar would settle the bill. The captain, who knew 
our uncle, made no objection. 

On arrival we found Uncle Hjalmar just settii^ out for the races. 
He invited us to accompany him and we should have accepted 
with pleasure; unfortunately, the captain remained in the back- 
ground expecting us to pay our debt. 

When Uncle Hjalmar heard what we had been up to he cooled 
off considerably. He gave the captain the money for the journey, 
handed us a sum which just covered the return trip to Kiel and no 
more, and bade us a frigid farewell. 

There we stood, in the morning sunshine, staring dumbly at 
each other ; then we trotted across to the harbour and returned to 
Kiel much discomfited by our unkind reception. 

“I i magi n ed our aristocratic relative would have given us a 
warmer welcome ”, Eddy grumbled, 

,3* 



66 


My First Seventy-Six Years 

“If you hadn’t guzzled all those sandwiches and beer Unde 
Hjalmar would have been decenter’’, I said. “But to start cadging 
the moment we arrived — ^well, it docs look bad.’’ 

“All right, no need to get mad”, Eddy growled. “Those sand- 
wiches and the beer were the beat part of the whole trip.” 

And to tell the truth he wasn’t far wrong ! 

On the zist July 1895 an event took place in IGel which was 
scarcely less memorable than the laying of the foundation stone in 
the free port of Hamburg, namely, the opening of the North 
Baltic Canal by no less a personage than Wilhelm II. It was called 
the Kaiser Wilhelm Canal after his grandfather who had laid the 
foundation stone of the lock at Kiel-Holtenau the year before he 
died. From here the canal runs straight across country ending at 
Brunsbiittelkoog on the Elbe. 

Warships from dozens of foreign countries were present; the 
German navy was dressed overall, the crews in gala uniforms; all 
Kiel was ablaze with bunting. Launches carrying distinguished 
guests in naval, gold-braided uniform, bustled through the harbour, 
guards of honour of the Red Marines were drawn up at the landing- 
stages. Germany, which in recent years had become Navy- 
conscious, was celebrating in Kiel an event that was to have far- 
reaching political consequences. First of all for the inhabitants 
themselves, the opening of this canal meant that Kiel was hence- 
forth directly linked with the naval squadrons operating in the 
triahgle of the North Sea. German liners need no longer go round 
by the Skagerrak and Kattegatt; they were no longer dependent 
on the benevolent neutrality of Ae Scandinavian countries. The 
port of Kiel could thus become the second arsenal of the German 
navy. 

The new canal also acquired a far-reaching commercial and 
political importance. In 1913, eighteen years after its inauguration, 
and the last year of peace, goods to the value of ten million 
net registered tons passed though the Kaiser Wilhelm Canal in 
twelve months ; in 1929 the total was more than twenty-one miUion 
tons. In that same year (1929) the Panama Canal averaged thirty 
million tons, the Suez cand twenty-eight million. The Kaiser 
Wilhelm Canal was therefore not far be^d. 

Of course we spent the whole week wandering about the har- 
bour, admiring the strange sailors from other countries, endeavour- 
ing to identify the various naval ensigns and studying with the 
greatest interest the extraordinary signals transmitted by the 
visitors, in daytime with semaphore flags, at night in morse with 
flashlamps. We stumbled over iron rivets on deck and listened to 



At the University 67 

the explanations of our guides (whom I suspect of stuffing us up 
with all sorts of yarns while keeping perfectly straight faces) ; we 
gazed in astonishment at the muzzles of the heavy-calibre guns 
projecting from the clumsy-looking turrets of the new battleships. 
But we never for one moment dreamt that they would ever be used 
in earnest; the very idea seemed incongruous. The world was 
making rapid progress ; each year saw us all a step further on the 
upward grade. We already had internal-combustion motors ; the 
first incandescent lamps were already in use; people were already 
talking of dirigible airships, the kind that my father had foretold 
by the light of the paraffin lamp in our Hamburg home. The 
world appeared fully occupied in producing all those miracles 
which year after year were being invented by technical and 
scientific experts. 

No, we had no thought of war. 

That same summer I went for a long cycle trip to Jutland, and 
took the opportunity of going to see my mother’s sister — ^the one 
who had refiised Uncle Wieding many years ago. Aunt Toni had 
married a Dane, Oerstedt by name, a Councillor of State and 
Lord Mayor. On my return journey I visited all those places where 
my peasant Schacht ancestors had lived and battled against the 
inroads of the North Sea. 

As a matter of fact this was no chance trip. On the way I came to 
a decision as to my future plans. Back in Kiel I said good-bye to 
medicine, studied the list of lectures and attended courses on the 
general history of literature. By way of filling in the remaining 
days of that summer term I unearthed the letters I had carried 
around with me ever since I had stayed with my grandfather in 
Friedrichstadt — ^the correspondence between Hebbel and the 
future Doctor Schacht. 

I went through these valuable papers and arranged them in 
proper order, wrote an appropriate commentary and sent the whole 
thing to the Mc^arni fur Literatur {Literary Review)-^m. those 
days a publication of high standing — ^which soon afterwards 
published my contribution. 

Hebbel’s actual letters travelled further afield and ended up in 
the Goethe-Schiller archives in Weimar. My work for the magazine 
provided me with a certain incentive. Of course I could not expect 
to come upon and publish original letters from a famous German 
poet every day. But I had derived considerable enjoyment from 
this work, so I stuck to it for the time being. 

At the end of my first term I returned to Berlin and attended 
every course of lectures on Germanic philology which , could 



68 My First Seventy-Six Years 

possibly be crammed into a single time-table. At the same time I 
joined a students’ literary society, the “Academic and Literary 
Union’’. While the society fought no duels it gave much satisfac- 
tion. It had been founded by such men as Ernst von Wildenbnich 
and Ludwig Ganghofer. I started as a freshman-fag* and was 
assigned to a “fag-master” whose job it was to initiate me into the 
mysteries of the students’ regulations then in vogue. His name was 
Monti Jakobs, later to become editor-in-chief of the Vossische 
ZeiUing. Dr. Franz Ullstein was also a member of this circle; so 
was Arthur Dix, the future editor of the National-Zeitung. 

Through Dix I was inspired to follow yet another trail. That 
was in my third term, which I spent in Munich. He suggested that 
I should attend the course of lectures on political economy given 
by the famous political economist Lujo Brentano. I acted on his 
advice and found the lectures so enthralling that I promptly 
abandoned Germanistic philology and devoted myself entirely to 
political economy. 

In those days political economy was looked upon as a very 
second-rate subject. "All the fools and failures practice economy” 
was the opinion of lawyers, theologians, doctors and philologists, 
the old inhabitants of their Alma Mater', and by that they meant 
political economy. 

From Munich I went for a term to Leipzig to Professor Karl 
Bucher in order to study journalism — a territory which had 
attracted my attention for some time and about which Professor 
Bucher (a former editor of the Frankfurter Zeitung) had written. 

Nowadays this is nothing unusual. But during my career as a 
student newspapers were still regarded as a necessary evil, and a 
journalist — ^to quote Bismarck — ^as "a man who has mistaken his 
calling”. ' 

Unfortunately it soon became evident that Karl Bticher set 
store only by those students who wanted to take their Doctor’s 
degree and were prepared to spend several terms under his tuition. 
Since that was not my intention I returned to Berlin. But I did not 
sever my active connections with the Press on that account. The 
year before I went to Leipzig I had already experienced the desire 
to take up journalism. How was a newspaper created ? What sort 
of men were they who by day and night supplied and remodelled the 
news that filled the pages of the morning papers ? 

During my second term in Berlin it dawned upon me that it 
was idiotic to write about “the paper” when one had no practical 

• In German universities a freshman often acted as a kind of fag to an 
older student. 



At the University 69 

knowledge of how a newspaper was produced. I had discussed 
this idea with my father who had shown himself to be very open- 
minded. After all, he had had me christened after one of the most 
famous newspaper-men of the United States, And he himself 
had been a journalist. 

“What have you in mind when you speak of practical work on 
a newspaper?” he asked. 

“I’d like to work for a few months at least in a newspaper 
office”, I explained. 

He thought this over. “ I could have a talk with Dr. Leipziger ”, 
he said. “He is the head of the Kleines Journal — admittedly it 
isn’t one of the leading newspapers. But still — ^we have business 
dealings with him. I will see what can be done, if you’re really 
keen!” 

That was in January 1896, when I was just nineteen. On his 
way to the office next day my father called on Herr Leipziger and 
told him what I wanted to do. Herr Leipziger, who had a high 
opinion of my father, replied that I could start on the ist February 
as an “unpaid assistant” on the Kleines Journal. 

“Tell him — ^as an ordinary unpaid assistant,” said Leipziger. 
“We pay no special attention to students.” 



CHAPTER SEVEN 


An Unpaid Assistant on the “Kleines JournaV^ 

H ave you ever written anything?” enquired the head 
of the local news department, Herr Fiirstenheim, when 
I presented myself at his office on the morning of 
the ist February. He spoke in a loud, sarcastic and somewhat con- 
descending voice. 

I was nettled. Had I ever written anything — of course I had! 
Whole volumes! 

“What?” asked Fiirstenheim curtly. 

"Poems”, I said. 

I had even had poems published — one, to be exact. And in 
order to have these verses printed in the Wiener Dichterheim I had 
had to pay five marks. The Wiener Dichterheim was supported by 
poets who paid to have their verses printed. 

“ Ha ! Poetry ! ’ ’ barked Fiirstenheim . He rummaged in an untidy 
heap of papers on his desk, pulled out a slip and said, “Go along 
to the Weidendamm Bridge — ^it’s half completed — and write me 
twelve lines — ^understand? No more.” 

Nothing simpler, I thought, took the slip of paper and set out 
for the Weidendamm Bridge. 

I could easily have written two himdred lines about this magni- 
ficent bridge. I could have described the gulls disporting themselves 
and reflected in the muddy spree, the red-nosed children standing 
on the bank looking on at the workmen, the workmen themselves, 
and their tools. But Herr Fiirstenheim had not asked for two thous- 
and nor even for two hundred ; no — ^he wanted just twelve lines. 

I hurried back to the oflice and mulled over those twelve lines. 
It seemed to me impossible to compress into twelve lines all the 
things that crowded into one’s mind at the sight of the Weiden- 
damm Bridge in process of construction. But Fiirstenheim had 
asked for; it. I sat down and filled three sheets — deleted a sentence 
here, another there. Suddenly an editor burst into the office and 
shouted; 

"Herr Schacht, where’s your twelve lines? D’you think the 
Berliners can wait till tomorrow morning for the Journal just so 
that you can sit and write poetry?” He caught sight of the written 
sheets and snatched them from imder my hand. 



An Unpaid Assistant on the “Kldnes Journal” 71 

“Stop, stop I” I called after him. “My report isn’t finished!” 

“No time!” he replied over his shoulder and hurried off, 
waving my pages like so many captured standards, “Make-up 
can’t wait.” 

I followed him and stared around the composing-room. 
Everywhere were men with lengths of queer-looking grooved iron 
into which they were tossing letters with nimble fingers. The 
letters came out of little boxes standing on a desk. The compositors 
didn’t even seem to look at what they were doing. Their fingers 
flew between boxes and composing-clamp— just one or two more 
blanks in between the letters and they were already lifting the 
rows of type out of the clamp and placing them in the huge iron 
galley in which many other rows were ready waiting. From the 
next room came the muffled clatter of the linotype machines, 

I was so fascinated by this sight that I completely forgot my 
report. Someone had snatched the half-finished copy out of my 
hand. Where was he? I looked around and saw the man who had 
made off with my pages. At the same moment he saw me, winked, 
nodded slightly and turned again to the make-up hands. In the 
meantime the latter had lifted one of the galleys and carried it, 
supported on their knees, from the composing-table to a low 
stand. Here it was inked with a roller, a sheet of paper laid over it 
and brushed firmly on to the galley with a brash. There was a 
queer hissing noise as the make-up foreman pulled the page from 
the galley. 

“Hm!” said Fiirstenheim, and scribbled something in green 
on the margin of the brush-proof (it was only later that I learnt 
that this was the name given to the page), “not at all bad for a 
beginner — qmte a nice little report.” 

I squinted over his shoulder and read my report on the Wei- 
damm Bridge. Then I blushed scarlet. There was not a single 
word of mine in it. The editor had written it up himself — after a 
brief glance at my notes. And I had to admit he had written it very 
well. 

“That’ll cost you a round of beer to make up for it ”, the make- 
up hand whispered. “Later, when the guv’nor’s gone!” 

I nodded, and glanced quickly around. All the compositors and 
make-up men seemed to be grinning quietly. Only Herr Fiirsten- 
heim appeared to take no notice of an^hing that was going on. 

I kept my eyes wide open during my time as unpaid assistant in 
Berlin, and learned just how a newspaper is produced. It was 
instructive and quite different from an3rthing I had imagined. 
Everything that went to the making of the KJeines Journal seemed 



-72 My First Seventy-Six Years 

to me at first to originate in the most haphazard way : it was thrown 
together anyhow and combined according to formulae which, to 
me, appeared completely senseless. It took me quite a while to 
realise that it was not chance that was responsible for the birth of 
the Journal, but that, on the contrary, the editors knew very well 
what they wanted. 

At their head stood Leipziger, staunch old Leipziger who 
on festive occasions sported a “Red Eagle, Fourth Class” in his 
buttonhole. One might have supposed that a paper directed by 
him would have had radical tendencies. But no — Leipziger was a 
monarchist and would allow no aspersions to be cast on his beloved 
Hohenzollern. Palace doings were taboo so far as he was concerned ; 
no invidious Court gossip ever appeared in the pages of his Journal. 
The Red Eagle ribbon may have had something to do with it, for 
Herr Leipziger was as proud of that as a French minister might be 
of his ribbon of the Legion of Honour. Monarchs were, after all, 
full of wisdom! 

So long as gossip had nothing to do with the Court, there was no 
limit or restriction to Leipziger’s enthusiasm. The Journal was a 
mixture of society scandal and American “yellow press” — ^the sort 
of thing that is nowadays contemptuously described as “pulp”. 
The circulation was not large: it was printed at Biichsenstein’s the 
printers and edited in the Friedrichstrasse in a house close to the 
Apollo Theatre, where we forgathered every day with renewed 
energy. 

Now and again we caught sight of Herr Leipziger’s father-in- 
law, editor-in-chief of Wespen {Wasps). He had made his name 
with his Kriegsberichte aus Bemau {War Despatches from Bertiau). 
Today they are long since forgotten. His name was Julius Stetten- 
heim. 

In the seclusion of his sanctum sat Professor Tappert, of 
purest Aryan blood, and did battle on behalf of Richard Wagner’s 
Valkyries in Bayreuth. 'Vhefeuilleton was the work of Herr Norbert 
Falk, whose hobby was writing novels. In charge of local news was 
Herr Ftirstenheim, under whom I had taken my first faltering 
journalistic steps. Leading articles of international interest were the 
work of Viktor Hahn, a man with a frequently fluctuating back- 
ground. When Viktor Hahn was not writing leaders he was an 
insatiable gambler. 

At Fiirstenheim’s instigation I would go out and about Berlin 
every day and would return with small reports — such as the one 
about the Weidendamm Bridge. I visited societies for the protection 
of animals, rabbit clubs, annual gatherings of allotment-holders, 
hairdressers’ guilds, variety performances and circus shows, It 



An Unpaid Assistant on the " Kleines Journal" 


73 

was not always easy to obey this reporter-muse when one had been 
accustomed to the somewhat highbrow seriousness of the univer- 
sity. Sometimes I managed to strike the right note. Then Fiirsten- 
heim was pleased and said so. More often, however, I perpetrated 
reports that were right outside the framework of the Kleines 
Journal. 

“Too highfaluting,” Fiirstenheim would say in his Berlin 
dialect, “You must learn to write popular stuff, Herr Schacht.” 
Or: “Who d’you think will be interested in that rubbish, Herr 
Schacht? Didn’t anything else happen at the dance?” 

“The chairman made a speech”, I replied condescendingly. 

“Well, wasn’t it interesting?” 

“Really, Herr Fiirstenheim, I can’t think of anything that might 
have interested anyone.” 

He looked at me out of the corner of his eyes, blinking like an 
owl in sunlight. His voice took on a sarcastic note. “So ! you can’t 
think of anything ? But you must think of something, Herr Schacht, 
or you’ll never make a journalist. People aren’t interested in your 
opinions but in the kind of thing they enjoy reading in the paper. 
That’s the kind of thing you’ve got to write.” 

I have never had better journalistic advice. Everybody — 
myself not excepted — expects their newspaper to write the kind 
of thing they enjoy reading. 

After I had been there a few weeks Herr Falk, the features 
editor, would give me an occasional play to write up, which meant 
three marks “expenses” and a complimentary ticket. In this way 
I went to the theatre free, gratis and for nothing, and since I never 
missed a play during my student days, these write-up assignments 
were very welcome. At that time there were two outstanding men 
of the theatre in Berlin — Otto Brahm and, somewhat later. Max 
Reinhardt. Of course, in tlie Academic and Literary Union we 
would discuss the theatre for nights on end, Reinhardt’s new 
stage technique has become a matter of history, but Brahm’s work 
is known only to the initiated. Under these two men Berlin leapt 
to the forefront and became one of the foremost stage cities of 
Europe. The theatrical style of the Yieima Burgtheater school was 
superseded in Berlin by Ae new realistic style. 

In those days the shining lights of the Berlin theatre were actors 
and actresses such as Matkowsky, ICainz and Agnes Sorma, 
dramatic critics of the stature of Theodor Fontane and Paul 
Schlenther, playwrights such as flauptmann and Sudermann. 

Nor was the lighter side of the theatre less well equipped. There 
were the new operettas modelled on the French vaudeville or 
English musical comedies, e.g. works by Paul Lincke staged at the 



74 My First Seventy-Six Years 

Apollo Theatre and by Victor Hollaender at the Metropol. There 
would be an unassuming original Jewish comedy in some side- 
street or other where Berlin dialect and Yiddish had full scope. 
One of these plays entitled “Alone at Lastl” I still remember. It 
was about a young newly-married couple who were pestered and 
plagued by hotel-keepers, servants, flower-girls and chamber- 
maids to such an extent that they ended by falling into each other’s 
arms — ^in a police cell I Alone at lastl Then there were the Berlin 
low comedians such as Bendix, that prince of funny men, and the 
famous Thomas who would rattle off their nonsense before a 
riotously appreciative audience all out for a good time. For an 
entire day Berlin would roar with laughter at these jokes* — ^the 
next day there would be fresh ones. Amd the whole town would 
be humming the melodies of Lincke and Hollaender. 

Much that I learned as unpaid assistant in Berlin I was able later 
to turn to good account. 

Of course my ambition was one day to fill a front page with my 
contribution. Every true journalist is an inveterate, unremitting 
hunter of what, in present-day American, is called a “scoop”. My 
chance came when I was nearing the end of my apprenticeship. 

By then I had already realized that first and foremost my work 
boiled down to what the French call tnise-en-schie — ^the setting. 
A journalist can “set the scene” of every story in such a way as to 
create an atmosphere of sensationalism. 

A rival newspaper had published a short account of an accident 
in the Spandau State Works. Fiirstenheim read the report and 
despatched apprentice Schacht out to Spandau to write up an 
original story for the paper. I went by train, blued my ‘ ‘ expenses ’ ’ 
on a first-rate diimer in a restaurant adjoining the factory and 
subsequently started on my enquiries. They were highly success- 
ful: I had no difficulty in obtaining all the information I wanted, 
so I boarded the train and returned to Berlin. 

In the editorial offices all was quiet; the editors had gone home, 
the compositors were busy completing the front page, I seized my 
chance. This time I was wiser than with that first day’s report on 
the Weidendamm Bridge. I sat down at my table, told the make-up 
hand to hold the page open and began to write. From time to time 
a messenger would arrive, take away my completed page and 
hurry oflF with it to the composing-room. By the time I had fmished 
I had written an article in grand style. 

• Unfortunately, like so many jokes in all languages which depend on 
puns and play on words, they are completely untranslatable. 



Aft Unpaid Assistant on the Kleines JoumaV' 75 

Next morning when the citizens of Berlin opened their Kleines 
Journal the first thing to catch their eye was a three column head- 
line on the front page : 

TERRIBLE DISASTER IN SPANDAU! 

Underneath it was the description of a fatal accident in Spandau’s 
State Factory — an event which could easily have been dismissed 
in six lines under Local News. 

That evening I had to stand the editorial department a round of 
beer, and was promoted from apprentice to journeyman. Shortly 
afterwards I resigned my position on the Kleines Journal and went 
to Munich. A year later I was back in Berlin studying rhetoric 
under Professor Dcssoir. Since then I have never taken any further 
active part in journalism. 

Years later, when I had completed some exhaustive research 
among the records of a certain newspaper, I wrote an essay on the 
Press in Conrad’s Yearbooks. This article, entitled Statistics of the 
German Press, has since been frequently quoted. In addition, I 
utilized the knowledge I had acquired in the writing of several 
other articles on the history of the Press which appeared partly in 
the Grensbote {Frontier Messenger), which at that time enjoyed a 
considerable reputation, partly in other periodicals. 

I have never regretted those days. On the contrary, I was always 
glad that, at the opportune moment, I entered this important field 
of our public life. And I took not a little pride in the fact that I 
discovered it, so to speak, off my own bat. 



CHAPTER EIGHT 


Paris at the Turn of the Century 

H err Dessoir, professor of rhetoric, knew how to create 
public speakers. When I first went to him I had no know- 
ledge whatever of the art of public speaking. Of course I 
had already heard such speakers, e.g. my masters at the Johanneum, 
my professors, the canidates of the political parties. They had 
always seemed to me to say just whatever came into their heads 
at that particular moment. Dessoir made us realize that public 
speaking is an art. 

He began by initiating us into the mysteries of logical speaking ; 
he warned us against such descriptions as “an old, aged man” 
(ein alter Greis*) “a dark, coal-black horse” (ein schwarger Rappe'W 
which might give rise to unexpected hilarity; and after he had 
given them a sound theoretical foundation, let his budding orators 
deliver speeches before the rest, in the course of which his gentle 
voice would frequently interrupt with such instructions as : 

“Your words must be joined by a silken thread. At present 
your speech sounds as though it had been put together with wire 
staples.” 

Professor Dessoir succeeded in imparting to his students the 
art of picturesque language, of employing the right imagery at 
the right moment, of resorting if anjrthing to understatement and 
letting his hearers guess the rest. 

I have never been able to indulge in what is described as 
“flowery lang;uage”. The Friesians are people of ready wit who 
take great delight in caustic verbal disputes — even when they pro- 
ceed very calmly and leisurely. I have never lost my enjoyment of 
debates and discussions with points demanding quick repartee, 
and my friends often said that if anyone wanted to do me a good 
turn they would attack me vigorously, 

I spent the winter of 1897-98 in Paris. Ofiicially I was en- 
rolled at Berlin University. But I wanted to learn French and 
felt that the best and quickest way to acquire the best French 
was to go to France. So I arranged for my allowance, made my 

* Greis — old man. f Bappe — ^black horse. 



Paris at the Turn of the Cetitury 77 

way to the Anhalt railway station in Berlin and took the train 
for Cologne. 

How times have changed 1 In those days the only question that 
presented itself to a student wishing to study in France was 
whether or not he could obtain a letter of credit from his father. 
The “transfer problem” had not yet been invented; difficulties 
with foreign exchange were non-existent. It was not even neces- 
sary to procure a visa from the French Consul. The German 
money that one took along could be exchanged at any bank without 
the slightest trouble. The French had gold francs, the Germans 
gold marks. Both were stable currencies, one hundred marks 
equalled one hundred and twenty-five francs. Anyone in posses- 
sion of this amount could manage quite well for a month if he lived 
economically. 

I took my seat in the train, read the paper for a while, then put it 
down and let my thoughts wander. There were one or two questions 
that I had to decide — ^the most important entitled “ Luise Sowa ”. 

I had met her during the summer holidays the previous year 
when I returned from Munich. She was the daughter of a police 
inspector living in the same neighbourhood as my parents. 

Luise was dark, lively, with a dainty figure, and most attractive — 
especially to me, I met her on the tennis court, where she wore a 
long skirt after the fashion of the day. We played together in the 
mixed doubles, I took her home and met her again soon afterwards. 

Gradually we came to luiow one another better and would go 
for longer and longer walks together on the shores of the Schlach- 
tensee. Eventually I was invited to her home. After that Luise 
received an invitation to my parents’ house. My mother was very 
much attracted by the girl and made no secret of the fact, 

Luise and I took part in an amateur performance in Schlachten- 
see and raised lao marks for the Red Cross. My parents were 
among the audience and they and Inspector Sowa between them 
were responsible for resounding applause. 

But in the autumn of 1897 Aere was no question of marriage. 
Luise and I had known each other for a year. All the same, it 
seemed to me sometimes as though our relationship would never 
develop any further. I was in the middle of my university studies 
and still feeling my way, and was simply not in a position to think 
of a family. Luise represented an unsolved problem in my life. 
I had seen what early marriage on insufficient means could do in 
the case of my parents. 

I thought over all this while the train rattled through the 
depressing turnip fields of the fertile Magdeburg plain. Gradually 
it grew dark, a guard came along with a taper, lit the gas, drew the 



yg My First Seventy-Six Years 

curtains and proceeded on his way. I took up a French grammar and 
began to study the irregular verbs. In my corner, one eye on the 
box in the luggage-rack above, I sat and studied till my eyes ached. 
At last we reached Cologne. I picked up my luggage and looked 
for a third-class compartment in the Cologne-Paris night train. 

I shall never forget the journey across Belgium. When we started 
there was one other passenger in the compartment who slept as 
soundly as I did. But these pleasant conditions underwent a change 
at the frontier. A patty of men pushed their way in, took possession 
of a window corner and began to play cards. 

Still half asleep, glancing up from time to time at my luggage, I 
remained in my corner wrapped in my coat and watched the men. 
The game appeared to afford them endless enjoyment although 
it was the simplest thing in the world. One of the players kept the 
bank. He drew three cards and laid them face upwards on the 
table so that the other players could note their colours and values. 
Then he turned them over and mixed them very dexterously. 
Finally he raised his hands and asked for one of the three cards. 
His opponent pointed to a card: the card was turned up. If the 
caller had guessed rightly he received twice the amount of his 
stake from the bank. If he had called the wrong card his stake 
went into the bank. I found it as easy as ABC; I staked — and 
lost my entire month’s allowance, except for twenty marks. I had 
been tricked by a bunch of ordinary card-sharpers. 

That was the first and last time in my life that I ever gambled. 
Later, as manager of the Danatbank, I saw how my co-managers 
gambled incessantly on the Stock Exchange. I have never gone in 
for it. While my colleagues’ abstracts of account were as thick as 
fair-sized novels, my deals would be entered in one small volume. 

I had gone to Paris with the object of going to the Collie Libre 
des Sciences Sociales and attending lectures on Sociology. At no 
time during my life did I appreciate the social sciences so warmly 
as during that first month in the French capital. 

Later I was to laugh over that incident in the night express, but 
it was no joke at the time. For a whole month I did not feel in the 
least like laughing. While I read Victor Hugo’s Les Miserables in 
order to improve my knowledge of the language, I fully appreciated 
the drcnimstances in which these poor souls subsisted on bread and 
water, since I too had somehow to eke out my existence on twenty- 
five francs and limited credit. 

When the lean month was over and a fresh supply of cash 
arrived from Germany I began to explore the great city. In those 
days I looked upon Paris with different eyes from those with which 



Paris at the Turn of the Century <75 

I considered it later at the time of the Young Plan. It still retained 
some of the splendour of the Third Empire. People came there 
from every county — ^partly for the sake of the good food and wine, 
partly on account of the fashions and the attractive women. 
Brazilians and Chinese, Americans and Dutch, Australian sheep- 
farmers and Indian Maharajas flocked to Paris, the centre of the 
fashionable world. Jacques Offenbach’s light operas were still being 
performed ; women’s dress was essentially feminine, the celebrated 
Col de Paris just come into being. Compared with Berlin, Paris 
was a city of opulence. Berlin was sober, industrious, intimate, 
middle class, slightly international and very “Prussian”; Paris 
was cosmopolitan, intoxicating, smart, somewhat snobbish and not 
at all “Prussian”. Nearly thirty years — a whole generation — ^had 
come and gone since the war of 1870 and the great Communist 
revolt. No one spoke of the war. These were the prosperous years 
just before the turn of the century. The idea of revenge appeared 
to be dead. 

Although during those years I took no interest whatever in 
high-level politics there was one topic which it was impossible to 
ignore, a topic which affected contemporary French thought and 
split the country into two opposite camps — T Affaire Dreyffs — ^the 
Dreyfus Case. 

The whole world knows the story of the Dreyfus Case. Dreyfus, 
a captain of artillery of Jewish origin and a native of Alsace, had 
been thrown into prison three years previously and in 1894 was 
sentenced to be deported for life to Devil’s Island. Even at that 
time there were numerous people who maintained that the captain 
was the innocent victim of a pofitical intrigue and had been unjustly 
condenmed ; he had been made the scapegoat of an attack calculated 
to strengthen French anti-aemitic feeling. In France at that time 
clerical partisans, nationalist and anti-semites, were hand in glove 
in the struggle for power since the downfall of the nationalist 
General Boulanger in 1889. Dreyfus had already been three years 
in prison when I was studying in Paris, and Emile Zola, France’s 
most famous novelist, was demanding a revision of the sentence. 
He wrote an open letter to the President of the Republic imder the 
heading "J^accuse!" which appeared on the 13th January 1898 in 
the newspaper L’Aurore. Zola’s letter had the effect of a bombshell. 
It is not uninteresting to know that Georges Cldmenceau at that 
time brought great pressure to bear on UAurore. As was to be 
expected, mere was strong opposition to the publication olj' accuse 
from nationalist circles, first and foremost from Rochefort’s 
VIntransigeant, There was a minor local revolt in Paris when it 
became known that, because of his letter to the President, Zola 



8o My First Seventy-Six Years 

had been sentenced to a year’s imprisonment and a fine of three 
thousand francs. The people of Paris organized protest-marches 
directed partly at Zola’s enemies, partly against the ‘ ‘ Dreyfusards ’ ’. 
Zola tvas forced to flee to England but was permitted to return 
to Paris eighteen months later. But by means of his letter he had at 
least succeeded in inducing the French Courts to reopen the 
Dreyfus Case, though many years were to pass, however, before the 
Jewish captain of artillery was finally vindicated. It was not until 
1906 that he was acquitted by the Court of Cassation, reinstated 
with the rank of major and soon afterwards, at his own request, 
placed on the retired list. 

I should have liked to be able to state that I had been intensely 
interested in the Dreyfus Case and that I had followed every phase 
of the drama which unfolded itself under my very eyes. Unfortun- 
ately it is not true. I took not the slightest interest in politics and 
was only anxious to take the fullest possible advantage of my stay in 
Paris. 

Nevertheless, I can say now that two problems crossed my path 
at a very early stage, problems with which I had later to contend for 
years on end in my capacity as minister and member of the 
Government: the problem of anti-semitism which, before the turn 
of the century, played so significant a role in France that people 
would take sides and come to blows in the public streets ; and the 
problem of Franco-Germ'an relations which reached one of its 
culminating points in the person of the man whose name I first 
heard in connection with the revision of the Dreyfus Case — Georges 
Cldmenceau. 

At Easter, 1898, I returned to Berlin, the richer by quite a 
few experiences. I had studied French and sociology ; above all, 
however, I had experienced some of the things that are sometimes 
of the greatest importance in one’s young days. And in Berlin 
Luise Sowa was waiting for me. We resumed our walks by the 
Schlachtensee ; I told her about Paris, about the elegant fashions 
and the smart restaurants. Towards the end of the Easter holidays 
I went to Kiel to work for my degree of Doctor of Philosophy. 
My attitude to Luise had become more casual. I was up to the 
eyes in work and had no time to bother about girls. She appeared 
to understand this. When we met again in the long vacation we 
broke off our somewhat premature engagement. She seemed to 
realize that at present I was unable to th^ of anything but my 
future career. We parted good friends, without reproaches but 
also without promises for the future. I did not see her again until 
five years later. 



CHAPTER NINE 


Doctor of Philosophy 

I TRAVELLED to Kiel having decided to take “Newspapers” 
as the subject of my thesis for my doctor’s degree. Nowadays 
there is nothing especially revolutionary about that. Institutes 
of journalism exist in connection with several German colleges. 

But it was different then. Wilhelm Hasbach, Professor-in- 
Ordinary and of Political Economy at the University of Kiel, had 
no use whatever for newspapers. My first interview with him was 
not exactly encouraging. 

Hasbach was a big man with reddish hair, steel-blue eyes that 
could flash like lightning from behind his glasses, and a pepper- 
and-salt beard. He was forty-nine years old and was reputed to 
be a hypochondriacal eccentric. 

“Why did you come to Kiel?” he asked aggressively when I 
had introduced myself. “I suppose you think it will be easier to 
take your doctor’s degree here?” 

I said that Kiel was, so to speak my own university — ^besides, 
my brother had passed his M.D. here. He appeared completely 
uninterested. 

“Not counting political economy,” he said grimly, “I have only 
had doctors of social philosophy in my university. You are the 
third.” (The first was Siidekum, afterwards a member of the 
Reichstag, the second was von Rostock Asmus who became a 
Syndic of the Chamber of Commerce* — I could not have been in 
better company). 

“What subject had you thought of for your thesis?” was 
Hasbach’s next — and decisive — question. I cleared my throat and 
said; 

“Well, sir, I am interested in journalism. The subject I had in 
mind was ‘ The Economic Sign&cance of Newspapers.’ ” 

The suggestion did not find favour with Hasbach. “News- 
papers?” he said, frowning. “Rubbish 1 That’s not the kind of 
subject for anyone taking a doctor’s degree. I believe after all that 
you have come here in the hope you’ll find it an easy job !” 

I began to feel anxious. “No, I didn’t,” I said. “If you know 

• Hmdehhammersyndikus. 



Sz My First Seventy-Six Years 

of a better subject for me, sir, of course I am prepared to work on 
that.” 

“Are you?” he answered shortly, glancing sharply at me. He 
went to his desk and began to rummage among his papers. My 
heart sank. A seventh-term student who approached a University 
Professor-in-Ordinary talces the trouble to acquaint himself 
beforehand with the latter’s work, so I knew that Hasbach had 
published two titles : The English Working-men's Insurance System 
(1883) and English Agricultural Workers During the Past Hundred 
Years, and the Enclosures Act (1894). Neither subject interested me 
in the least. Would I have to proceed on those lines ? 

Luckily it didn’t turn out as bad as that. I was unaware that, at 
that time, Professor Wilhelm Hasbach was at daggers drawn with a 
political economist in Heidelberg. The subject of the dispute was 
whether or not the English commercial system could be classed as 
theoretical and related to political economy. The Heidelberger 
said yes, Hasbach retorted no. At the moment he was very much 
taken up with this quarrel. The Kiel professor knew of course that 
for a well-authenticated refutation it was necessary to obtain evi- 
dence which could only be extracted with considerable trouble 
from the records. It must have occurred to him while he was forag- 
ing in his desk that I was the very man to draft this counterblast 
against the Heidelberg commercialist. At any rate he turned to me 
in quite a friendly manner, motioned me to sit down, and said: 

“Listen, Herr Schacht, I might be able to provide you with a 
magnificent theme for your doctor’s thesis, but it would probably 
involve your going to England. Could you manage that?” 

I thought of my time in Paris and said I could. Why not ? 
In England it should be possible to live very cheaply. 

“Read through this,” said Hasbach and handed me the volume 
by his Heidelberg opponent. “I think one could produce a whole 
lot of arguments against it, assuming one could investigate the 
writings of the commercialists on the spot, that is to say, the British 
Museum in London.” 

Like many other Professors, Hasbach occasionally exploited his 
students by making them tacUe the problems of their instructor. 
Since, however, this had always been the case there was nothing to 
be said. I accepted Professor Hasbach’s assignment for my doctor’s 
degree and set mjraelf to study his opponent’s book. 

The subject of my task was The TheoreHced Quality of English 
Commerce. As Hasbach had prophesied, it necessitated travelling 
to England. I made the journey in January 1899, a year after those 
exci^g days in Paris. I kept my travelling expenses as low as 
possible, going by cargo boat to Hull for twenty marks, staying in 



Doctor of Philosophy 83 

London a fortnight and returning to Kiel by the same route. In 
spite of this, of course, I needed more money than usual. Luckily 
I found a financial backer in the editor-in-chief of the KieUr 
Neueste Nachrichten, who entrusted me with the art and dramatic 
criticism of his newspaper. 

I had been a member of the Berlin Academic and Literary 
Union, had studied Germanic philology and history of literature 
for several terms and had already worked in a newspaper of&ce. 
The chief editor was pleased with my style and my approach to 
art criticism. We became acquainted during my last term and this 
afforded me the advantage of regular auxiliary work on a first- 
class paper, for the Nachrichten under my friend’s energetic 
direction was more in the style of a national newspaper and that 
time had completely outstripped the venerable Kieler Zeitung. 

Unfortunately, as so often happens, the publisher of the paper 
held different views from those of the editor. He did not like my 
criticisms and raised objections to them with the chief editor, who 
backed me up. But the publisher stuck to his opinion that I was 
too young and inexperienced for such an important position. 

Matters came to a head one day over an exhibition at which I 
had praised the work of a very young painter. The publisher, who 
disliked this young artist’s work, said that my write-up w'as biassed 
and prejudiced. 

"What had I better do?" the chief editor asked. 

"Why not submit the notice in question to an impartial group 
such as the Kiel Art Club for their opinion,” I countered. " If they 
consider that I’m too young for the post I will gladly resign.” 

He acted on the suggestion and sent the notice to the Art 
Club without telling his publisher. Two days later we received 
their reply. The club was of the opinion that this criticism, and 
others by Herr Schacht, were objective, impartial, and written 
with adequate knowledge of the subject. They could find nothing 
against him. 

Armed with this letter the editor betook himself to the publisher 
who thereupon withdrew his opposition. 

It might perhaps be appropriate to mention the name of the 
artist who was almost the cause of my leaving the Kieler Neueste 
Nachrichten. At that time he was very young— just, eighteen years 
old — and his name was Max Pechstein. 

Sometimes, while dividing my attention between English 
commerce and the local theatre, I could not help recalling my 
first term at Kiel, It was only four years ago, but it often seemed 
as though I had grown twenty years older since then. In that first 



My First Seventy-Six Years 

term while I was swotting over bones and tissues and writing reams 
of verse, I did not dream that in a fewyears time I should be writing 
a serious work on English Commerce. On the contrary I sincerely 
believed that I was destined to be a poet. One of my friends was a 
musician who possessed the gift of being able with consummate 
ease to jot down tunes on any bit of music-paper. Together we 
dreamed of collaborating some time in the writing of an opera, or 
at the very least an operetta. He badgered me so persistently that 
I laid aside my anatomical efforts and drafted a libretto based on 
Grimm’s fairy tale of The Princesses who Danced Their Shoes into 
Holes. Unfortunately it had precious little action, consisting only of 
a sequence of lyrical scenes loosely strung together. My composer 
friend set the lyrics to music — and there our dream ended: the 
masterpiece was never performed. But at least I could boast of 
having, at one period of my life, written an operetta I Many decades 
later I was reminded of this “youthful indiscretion” in a most 
amusing way, of which more later. 

So, at intervals, I recalled that first term. I remember how the 
Wiener Dichterheim had published my first poem for which I had 
had to contribute five marks towards expenses, and how proud I 
had been when I saw my full name printed underneath the twelve 
lines of verse. I sent a few copies of the little magazine to my friends 
and basked in the thought that I was now a poet with published 
work to his credit. 

No — am by no means an outstanding lyric writer — ^nor was 
I even in my callow youth. The moral, didactic element invariably 
obtrudes. And, as a matter of fact, I earned my first fee as a journal- 
ist not with a poem but with an aphorism : ‘ ‘ Eating keeps body and 
soul together — drinking tears them apart.” Certainly no heaven- 
inspired flash of genius 1 In later years I had many better. But 
the editor of Jugend (YoutK), to whom I sent this gem of wisdom, 
paid me two whole marks for it. 

The art notices for the Kxeler Zeitung were more in my line. 
They demanded critical knowledge besides carrying decidedly 
better fees. 

My trip to London was short and uneventful. Since then I 
have visited the English capital many times, occasionally in very 
dramatic circumstances. 

On this occasion I stayed in a boarding-house in Tottenham 
Court Road, an interminably long street with rows of houses on 
either side between Soho and Regent’s Park. I had chosen it because 
it was not far from the British Museuni. I had only to cross Bedford 
Square to reach the entrance to that vast building from whose 
shelves I obtained and consulted the works of mercantile authors 



Doctor of Philosophy 85 

ancient and modem: John Hale and John Stuart Mill; Locke, 
Hume, and the remarkable Daniel Defoe, known to children the 
world over as the author of Robinson Crusoe. To them it is an 
adventure story, while in fact it constitutes a broad outline of a 
primitive economy — a delineation, so to speak, of political economy. 

As I had only a fortnight at my disposal I was fully occupied, 
and in consequence saw but little of the city. After breakfasting 
on milk, bread and butter, I went straight to my seat in the huge 
reading room, made copious extracts from the old books, left the 
museum about midday for lunch and returned immediately to 
work till closing time. Then I dined, went for a short stroll and then 
to bed. Once or twice I went to a music-hall, a favourite English 
entertainment. On Sundays I took long walks in Hyde Park. The 
English Sunday was a very dull, uninteresting affair. 

London in January was then a dreary city. The streets were 
usually shrouded in thick fog through which the sun rarely pene- 
trated ; the air was raw, cold and often choldngly filled with soot. 
Life in late Victorian London, especially in winter, could not 
compare with that in Paris at the turn of the century. I began to 
understand why wealthy English people bought villas on the 
Mediterranean, in Amalfi, on the C6te d’Azur, London is the 
most unsuitable spot in the world in which to spend a fortnight in 
winter. 

My doctor’s thesis eventually comprised one hundred closely- 
written pages copiously sprinkled with footnotes. In order to 
strengthen and justify the Professor’s campaign against the 
theoretical quality of the mercantile system I had confirmed every 
sentence with quotations from the English originals. Only one half 
of the work, therefore, was in German: the other half was in 
English. 

When I had made a fair copy I handed it to Professor Hasbach 
and entered my name for the oral examination. I think he was 
pleased with the work. 

The oral examination took place in August 1899 . 1 still remem- 
ber it well as it was connected with a very curious conversation. 

Officially, it must be noted, I was not taking my degree as 
Doctor of Political Economy but as Doctor of Philosophy. As yet 
there was no degree of Dr.rer.pol. in Kiel. Consequently I was 
obliged, if only for form’s sake, to be examined by a philosopher. 
Philosophy was compulsory. 

I had passed the oral examinations in other subjects without any 
trouble, but I anticipated the examination in philosophy with a 
certain amount of anxiety. I have never been a lover of intellectual 



86 My First Seventy-Six Years 

speculation. I like mulling over problems; I enjoy having hard 
nuts to crack. But they must be practical problems capable of 
solution by practical means. 

The professor in charge of this most learned of all the sciences 
greeted me kindly and invited me to sit down. He questioned me 
on the subject of sundry philosophers; I did know a little about 
them. In some instances I remembered fragments of theories 
associated with those particular names. I stammered something, 
then relapsed into silence. The professor scribbled jerkily on his 
writing-pad and frowned. Suddenly he looked up sharply, stared 
past my left ear and asked : 

“What is that?" 

I turned quickly, following the direction of his gaze. It would 
not have surprised me to see the ghost of the founder of the 
university emerge through the wall. But there was no ghost- 
only a plain brown cupboard in a corner of the room. The 
professor repeated his question; “What is that?" 

“A cupboard,” I said. 

“Right,” The professor of philosophy was relieved. I knew what 
a cupboard was. But now came the critical question: “What is 
that cupboard?" 

Do you know what a cupboard is? I had never thought about it 
before. I used a cupboard to put my clothes in but that was all I 
ever did with it. I had never stopped to consider it one way or 
another. 

“Well!" said the professor impatiently. “What is that cup- 
board?” 

He sounded irritated — I had to give some sort of an answer. 

“Brown,” I said. 

“What else?” he said. “Don’t you notice anything else about 
it?” 

“Square — ^that is, cubiform,” I stated. 

“What else?” 

“Wooden,” I ventured. The philosopher behind me snorted. 

“Man alive!” he exclaimed testily, “the cupboard is spatialV' 

I stared at him uncomprehendingly. He began to laugh, louder 
and louder, pulled a handkerchief from his pocket, wiped his eyes, 
took his pencil and crossed out all his remarks. 

“Oh, this political economy,” he said somewhat resignedly. 
“What do you really know about philosophy?” 

I knew a little and quoted Locke and Hobbes and one or two 
other passages from my thesis. 

“That will do, thank you.” 

Somewhat mortified I went home — and quite uncertain as to 



Doctor of Philosophy 87 

the result of that examination. Would the professor of philosophy 
upset all my plans at the last minute, declaring that one could not 
possibly confer the degree of Doctor of Philosophy on a man who 
did not know even the elementary principles ? 

This uncertainty lasted two days. Then a messenger arrived 
with a letter from the university. 

I had been awarded the degree of Doctor of Philosophy. 

This time I did not make the mistake of sending my father a 
telegram. I packed my things, despatched them to Berlin and 
followed a few days later. 

All that winter I lived with my parents and attended the Schmol- 
ler Training College, where I continued my studies in political 
economy, and in the evenings went to the play or light opera. 

By now we had really reached fin de siicle. An old century was 
nearing its end, a new one stood on the threshold. By now I had 
learned to look upon Berlin as home. Berlin was neither purse- 
proud nor exclusive like Hamburg. It was pleasant, witty, brilliant, 
mischievous — and human. The tolerance displayed by the Kings 
of Prussia had invested the city with a special character of its own. 
Malicious tongues sometimes declared that Berlin was, in fact, not 
German at all, but a colony of foreigners — French Huguenots, 
Dutch Remonstrants, Oriental Jews, Polish conspirators and 
Italian cai'honasi. 

At any rate nobody was ever asked whether he was a “Berliner 
by birth If he was in Berlin he was a Berliner. 

On New Year’s Eve, 1899, we were sitting in the villa at 
Schlachtensee drinking hot punch my father had brewed. Just like 
it used to be in the old days, and yet — so much had changed. 

“Finish your drinks so that I can fill them up again,” said my 
father. “In twenty minutes it will be nineteen-hundred.” 

“Good Heavens 1 ” my mother exclaimed and set down her 
glass on the table. “Nineteen-hundred I Do you remember, Wil- 
liam, how we got married? That was twenty-seven years ago! 
What a lot we have experienced since then.” 

I looked at her. Her hair had turned grey. For twenty-seven 
years she had toiled with her hands for her family’s sake; she had 
scrubbed floors and washed linen, she had cooked ; she had watched 
by her children’s bedside, and always she had had in mind the 
future destiny of her four sons. 

My father must have been thinking much the same thing. He 
removed his cigar, looked at mother, cleared his throat, replaced 
his cigar and began to fill the glasses. When he had finished he 
removed his dgar for the second time and did something he very 



88 My First Seventy-Six Years 

rarely did. Since the evening when he had returned home with the 
Equitable Life Insurance job in his pocket he had never again 
kissed my mother in the presence of the children. Now he leaned 
forward, gave her a luss and stroked her hand. 

“Yes, Mother,” he said, “twenty-seven years. And now we 
have grown-up sons. One is a doctor, the other a philosopher. 
We wouldn’t have thought it possible.” 

Oluf and William stared, wide-eyed. 

From outside came suddenly the sound of gunfire. Somewhere 
a clock began to strike ; bells pealed, people shouted at each other 
along the street that ran through the pinewood. We raised our 
glasses and drank to one another in silence. 



Part Two 

THE UPWARD ROAD 


4 



CHAPTER TEN 


Commercial Treaties 

T he new era seemed to be governed by domestic affairs. 
Economic problems loomed more and more in the fore- 
ground. 

I was studying political economy at the Schmoller Training 
College and one of the men who at that time exercised considerable 
influence upon me was Professor Schmoller himself. Gustav von 
Schmoller (he was awarded a title in 1908) belonged still to the 
nineteenth century — one of those great Liberals who, politically 
speaking, never quite managed to “get there ”, but whose work has 
nevertheless borne fruit. 

Schmoller was a “socialist doctrinaire”. He had been born six 
years after Goethe’s death and had certainly never experienced in 
his own person the struggle of the industrial workers and those 
who had migrated from the country to the big cities. It was this 
lack of personal experience that imparted to his words a theoretical 
flavour completely summed up in the expression “socialist 
doctrinaire The working classes, in process of organizing them- 
selves into the Social-Democratic Party, preferred officials who 
had risen from their own ranks. They wanted no “middle-class 
socialism”. 

But the actual period of political industrialism came to an end 
with the turn of the century, as did the period of large-scale 
capitalism. The starting-point of this development dated from 
Bismarck’s lifetime when ^e Chancellor had succeeded in carrying 
through his great work of social insurance between 1881 and 1889, 
which had been introduced to the Reichstag by an Imperial 
message. The “socialist doctrinaires” had a considerable share in 
this social achievement. 

At that time there arose the grotesque state of affairs when the 
leaders of the Social-Democratic Party ranged themselves against 
these laws — solely because they originated, not among the workers 
but in titled and middle-class circles. 

But the results of this legislation soon became apparent and 
helped greatly to relieve the tension in the social atmosphere, for 
in 1908 there were already in Germany thirteen million people 
insured against sickness and twenty-four million against accidents. 



Commercial Treaties 91 

And those insured persons without exception came from the ranks 
of the impecunious masses of our people. 

In proportion as the hardships of this first industrial period were 
overcome the pronouncements of the middle-class social reformers 
gained weight. Among them was Schmoller.Whilc the workers* 
leaders sought to gain power for their own class by means of organ- 
ization, the middle-class reformers were seeking a new social ethic. 
Man’s moral responsibility for his fellow man was their first 
commandment. 

From the kindly old man who, during a lifetime, had watched 
with attentive eyes the change in the social structure of his time, 
I learned that all true reforms must proceed along the path of 
evolution, of natural unforced development backed by under- 
standing and goodwill. 

In addition to his Year-Books, to which I often contributed, 
Schmoller published a series on political economy. One day he 
sent for me. 

“I have read the thesis you wrote for your doctor’s degree,” 
he said, “and I should like to publish it in book form. But for 
this you would have to translate the English quotations into 
German.” 

He made the suggestion just when I was in process of securing 
a position. I didn’t want to be a burden on my father any longer; 
besides, I should have to earn the cost of the printing expenses. 
My monthly allowance as a student had always been scanty but I 
had come through the whole of that period without getting into 
debt and could start my career unencumbered by financial 
difficulties. In subsequent years, too, I never had any debts, not 
even during the period of inflation when owing money was a 
very paying game. 

The prospects of obtaining a job were not unfavourable. It was 
just the time when numerous economic organizations began to 
take shape and wanted to bring their business interests to the notice 
of the public and of the Government. Opportunities for economic 
secretaries and syndics were improving. 

I answered an advertisement in a professional newspaper and 
received by return an invitation to an evening debate sponsored 
by a Dr. Vosberg-Rekow. This gentleman was manager of a 
“Central Office for the Preparation of Trade Agreements”, a 
“ring” comprising several large-scale manufacturers interested in 
export. Yosberg-Rekow was an adept at inducing his members 
to contribute handsomely to the funds out of which the Central 
Office— to say nothing of himself— made their living. He was a 
highly intelligent man with an extraordinary gift for handling his 



g 2 My First Seventy-Six Years 

fellows, though his character and technical Icnowledge were not 
quite on the same level. But a brilliant persuasiveness of manner 
concealed his underlying superficiality. 

1 took part in the debate, and since I had absolutely no experience 
I did my best to turn my recently-acquired university subjects to 
good account, my aim being to outdo other competitors who were 
present. Actually I obtained the appointment that same evening, 
but for a somewhat different reason than the one I had anticipated. 
Vosberg-Rekow came up to me and said: “If it suits you I shall 
start you off with a salary of loo marks a month. You are the only 
one here who has turned up in a dress suit, I like to see my staff 
take a pride in their appearance.” 

My job as clerk in the Central Office for the Preparation of 
Trade Agreements was the only one in my life for which I ever 
applied. In all my subsequent positions it was invariably others 
who applied for my services by reason of my qualifications and 
experience. In later years I have always steadily refuted any 
complaints I have heard about how hard it is for young people to 
get on, how many obstructions are placed in their way. The 
demand for efficient staff is always far greater than the supply. 
More than anything else an employer is on the look-out for the 
hardworking reliable man who, hke the despatch-rider who de- 
livered his message to Garcia, in spite of every obstacle, will see 
the job through to the end. 

SchmoUer was disappointed when I told him I had no time to 
translate my thesis into German. I had neither typewriter nor 
shorthand-typist. Half my thesis consisted of English quotations ; 
I should have had to rewrite the whole thing and translate them 
all, for which ray new job left me no time. Only the customary 
three hundred copies of the thesis were printed and these now lie 
buried in the libraries to which they were presented. 

The ’eighties witnessed the start of Germany’s great economic 
upheaval. It was beginning to be recognized that German soil 
could no longer by itself provide sufficient agricultural produce 
wherewith to feed the growing population. Germany would have 
to import grain and furnish the necessary currency by means of 
industrial exports. 

This was the occasion for political resistance on the part of 
farming circles who demanded ffie imposition of protective taiiffs 
against the cheap foreign grain. It was the beginning of the contest 
between Germany’s export trade and competing foreign industrial 
countries for possession of the world’s markets. 

General von Caprivi, who succeeded Bismarck as Chancellor, 



Commerdcd Treaties 93 

summed up Germany’s situation in the following impressive 
words: “We must either export men or merchandise.” 

The whole of Central Europe from the North Cape to the 
Gulf of Taranto was in similar plight: the produce of the land no 
longer sufficed to feed the increasing population. Even the most 
prohibitive tariffs would have been powerless to alter prevailing 
conditions. Emigration or export became the decisive question. 
Germany chose die broad road: the price of her increase in popu- 
lation was the risk of conflict with other countries. She emerged 
victorious from the economic struggle for an adequate share of 
the world’s markets: she failed to surmount the concomitant 
political danger. 

That this struggle was not always pursued by Germany with 
the right political weapons has been brought home to us by the 
after-effects of two World Wars. Nevertheless, one fact has been 
established which no errors and no sufferings can explain away: 
the fact that, in the very heart of Europe, there exists today a 
nation composed of seventy million Germans whose political 
significance can no longer be ignored. 

While I was still at SchmoUer’s Training College yet another 
authority— Professor Hans Delbriick, editor of the Preussischen 
JahrbUcher (Prussian Year-Books ) — approached me with a request 
that I would write for him. For ten years I contributed book reviews 
and articles to this important monthly. Next to Schmoller, Hans 
Delbriick has been my most valued teacher, and to him also I owe 
a debt of gratitude for more than one decision during my period of 
growth. Delbriick was no Socialist doctrinaire but a politician in- 
tensely interested in Germany's political development. He counted 
himself as one of the Liberal-Conservative group, though on many 
questions he maintained a highly independent and non-party 
attitude. 

Writing for the Premsischenjahrhucher gave me the opportunity 
of defining my attitude to current questions of mercantile policy. 
In my first article (February 1901) I had already given expression 
to two ideas in regard to the dispute over the “bread racket” and 
the “prohibitive tariflfs”. The first was that the consumer would 
put up with a higher tariff on grain, which the farmers considered 
essential, and could afford to do so provided this tariff were 
counterbalanced by safeguards, by extension of the export trade 
and by the gradud rise in wages which might consequently be 
expected. The second idea was that, even more important than the 
actual tariff level, was the reciprocal fixing of tariffs over a con- 
siderable period, which would permit the uninterrupted develop- 
ment of stable conditions in the various economic circles. “The 



My First Seventy-Six Years 

essential question”, I definitely affirmed, “is whether we can 
obtain new trade contracts in spite of a higher duty on grain; not 
whether, and to what extent, the duty on grain will increase the 
price of bread. If we do obtain new trade contracts despite a higher 
tariff, then we may confidently assume that we can look forward 
to a further period of economic prosperity which will also enable 
us to eat high-priced bread.” 

The articles which I published during those years in the 
Pretissischen JahrbUcher and in Schmoller’s Jahrbuch leave no 
doubt as to my fundamental conception of economic policy — a 
conception I have maintained throughout my life. 

The development of the highest and most efficiently organized 
productivity seemed to me then, as now, the beat, indeed the only, 
means of bringing about the greatest possible improvement in the 
welfare of the masses. To achieve this it is necessary that economics 
be kept free from political disturbances. External arbitrary action 
in matters of commercial policy, and devaluation of currency are 
as disruptive as internal strikes and lock-outs. War and class- 
hatred have always seemed to me the scourge of economic life. 

The improvement in the social conditions of the masses has 
always been a matter of primary importance to me; and this I 
evinced in an article I contributed to the Preussischen JahrbUcher in 
December of the same year. In this article I emphatically supported 
the principle of a foreign trade policy which encouraged the pro- 
cessing and finishing industries because they provided more work 
for German brains and hands than in the raw material and semi- 
manufacture industries. A cargo of pig-iron, for example, destined 
for abroad is less desirable than a cargo of fine textiles of the same 
value. In the first instance, the greater part of the proceeds goes 
into dividends; in the second, to wages. And in my own epi- 
grammatic fashion I declared: The “heavy” industries represent 
Capital, the “light” industries represent Labour. 

In the same category is an artide dated October 1902, in which 
for the first time I put forward the idea of industrial trusts as 
opposed to the usual cartels. A cartel is a collection of industrial 
concerns manufacturing the same goods, and agreeing amongst 
themselves to keep the prices as high as possible. A trust, on the 
other hand, embraces those enterprises concerned with the pro- 
duction and manufacture of the same material from the raw mate- 
rial to the finished artide. I pointed out that the first object of this 
vertical aspect of production is to reduce production costs and 
increase consumption. The reduction in costs admits of a reduc- 
tion in prices, leading to extended and lower-priced consumption!, 
which, however, is the aim of every industry. 



Commercial Treaties 


95 

“The cartel is a drug, the trust is an elixir”, I declared, cate- 
gorically. 

It is significant that Germany’s economic problem today is 
exactly the same as it was when I described its earliest visible 
stages more than fifty years ago. I wrote : “The problem of mercan- 
tile policy that we have to solve is at bottom a problem of popula- 
tion policy. We have to provide work for the millions of German 
workers who live on German soil and arise in endless succession 
from the womb of their Motherland. Today these masses can no 
longer be maintained by the cultivation of grain or the production 
of semi-manufactured goods : the only way to provide them with 
work is to absorb them into intensive agricultural small-scale 
undertakings on the one hand, and into processing industries on 
the other. We have one factor at our disposal in unlimited measure : 
the intellectual and manual labour of human beings. We must 
endeavour to expand and develop this factor in such a way as to give 
us a lead over all other nations, who are not capable of competing 
against us with nothing but cheaper foreign raw materials.” 

In October igo8 the opening sentence of an article ran: — 
“The work of economic policy is based on two fundamental 
requirements : the highest possible economic production and the 
fairest possible distribution of the results of such production.” 
The article was by way of introducing an exhibition featuring the 
electrical industry. In this case I had no recourse to official statistics 
but was obliged to rely solely on private information, because as 
yet there were no such things as official electricity statistics. In 
this article I pointed out the colossal waste among the concerns 
engaged in electrical generation, whereby the innumerable little 
local electric works had the last word. I was able to prove that not 
only the prices for light but also the prices for power fluctuated 
between sixty and seventy pfennigs per kilowatt, and the small 
communal generating stations were the dearest, not merely on 
account of their limited capacity, but also because they were a 
welcome source of taxation for the communal authorities. By 
contrast I advocated a concentration of production in large 
generating stations with the aim of cheapening consumption, 
bringing electric economic policy under a single state leadership 
and combining public control with private enterprise. I am glad 
to say that later development of electric generation has proceeded 
along the above lines. 

In 1901 1 transferred my activities from the Zentrdlstelle to the 
newly established larger Hemdekverlragsverem (Association for 
Mercantile Contracts). On the board of administration were the 
directors of most of the principal banks and a very considerable 



g 6 My First Seventy-Six Years 

proportion representing the export trade and shipping companies 
with whom I achieved personal contact. Among them was Emil 
Rathenau, a friend of Edison and the father of Walter Rathenau; 
in addition there were merchant princes from the Hanseatic cities 
such as Achelis of Bremen, chairman of the Norddeutscher Lloyd, 
and Adolf Wormann of Hamburg, one of the German colonial 
pioneers. I was in touch with practically all the chambers of com- 
merce and economic associations and even more closely with the 
economic press. As I myself was responsible for the publication of 
the Handelsvertragsverein’s Bulletin, I joined the Berlin Press 
Union and remained a member until its demise under Hitler. 

At the head of the Handelsvertragsverein was Georg von Siemens, 
the founder and first manager of the Deutsche Bank, with whom I 
was in close collaboration several hours a day until his death in 
October igoi. 

The elucidation and journalistic presentment of my economic 
ideas gave me great pleasure. A less pleasing feature, however, 
was the fact that the Handelsvertragsverein' s propaganda work 
proceeded on less rational lines, and the campaign for trade 
contracts was of necessity conducted at mass meetings with the 
aid of political slogans. 

During those two years I had to speak at innumerable meetings 
of economic groups, trade union assemblies, etc., and thereby 
gained practice not only in delivery but also in discussion. But I 
found the exploiting of such work for party-political ends unsatis- 
factory. Among the staff of the Handelsvertragsverein engaged on 
propaganda work were to be found such impartial, objective 
individuals as Heinz Potthoff who later became a very live 
wire in the socio-political world, and others who inclined to radi- 
calism as, for example, Rudolf Breitscheid and Hello von Gerlach, 

When in 1901 I was asked to stand for the Reichstag at the 
general elections I declined and left the field open in favour 5 |of 
my colleague Heinz Potthoff who was eventually successful. 
I became more and more deeply interested in purely economic 
questions. I have stuck to this all my life and have steadily avoided 
one-sided party politics. That does not mean, however, that I 
have refused to take part in public life. For years I was on the com- 
mittee of the Young Liberals’ Association where the younger 
disciples of the National Liberal party were wont to congregate. 
This group embodied a strongly progressive tendency which was 
often a source of annoyance to the older party bosses. 



CHAPTER ELEVEN 


I meet some of the Big Bankers 

T he Handelsvertragsverein proved a very important factor 
in my upward progress. Not only did I make the acquaint- 
ance of the outstanding economists of the day, but they for 
their part were able to see me at work, and my method even at that 
time must have acquired a fairly definite character. 

I remember a conversation with Georg von Siemens on the sub- 
ject of a colleague whose erratic ways obviously got on his nerves. 

“Look, Herr Schacht,” said Siemens, “this is how your col- 
league works — ” and his index finger hop-skipped-and-jumped 
across the table. Then he withdrew his hand abruptly and looked 
at me : “And this is how you work.” This time his finger sped in 
a single energetic movement over the surface. 

Since I had obviously not made a bad impression it was a fore- 
gone conclusion that in due course sundry members of the 
board of management should approach me with offers of employ- 
ment, not all of which were tempting, though more than one 
appeared very interesting. 

Thus it happened tlmt Prince Ernst GOnther of Schleswig- 
Holstein, brother-in-law pf the Emperor Wilhelm II and brother 
of the Empress Auguste Viktoria, sent his adjutant to see me one 
day and invited me to a conference. 

The Prince received me at his Berlin residence, wearing a 
dark blue suit, and for half an hour stood chatting with me, smok- 
ing a cigar, and giving me the impression of a quiet, almost shy 
personality. His idea had been to appoint me administrator of his 
property and financial affairs — certaiiily a most honourable position 
but not one which would really have satisfied me. 

Early in 1903 I had the opportunity of entering an important 
South German Chamber of Commerce as a member of the Commit- 
tee. Shortly afterwards old Emil Rathenau invited me to join him at 
the Allgmeine Elektriistiats-Gesellschaft (A.E.G.— General Electric 
Company). I was tempted to agree. But a third offer attracted me 
still more. Waldemar Muller, a privy councillor and a member of the 
board of the Dresdner Bank, offerea me a post in that undertaking. 

I felt that employment in one of the big “D” banks would 
afford me the widest scope to acquire the greatest possible insight 
4 * 



p8 My First Seventy-Six Years 

into economics. The principal German banks were not merely 
concerned with deposit and current accounts, as was tlie case in 
England ; their activities covered an immense range including the 
financing of industrial undertakings, the acceptance and disposal 
of shares and bonds of industrial works, transport firms, parishes 
and comm un ities, provinces and entire States. 

Muller, known by his nickname of “der blonde Waldemar” 
(‘Ginger’ Waldemar), had come from the Reichsbank, many of 
whose board had transferred to private banks. Thus Herr von 
Klitzing had gone to the Darmstadt Bank ; Hartung (another privy 
councillor) to the Schaffhausen Bankers Association which was later 
amalgam a ted with the Discount Company [Diskontogesellschaft), 
and Muller to the Dresdner Bank. 

My actual appointment had a humorous flavour. I sat opposite 
Muller who asked me the fateful question: 

“How much have you been earning up to now, Doctor 
Schacht?” 

"Eight thousand eight hundred marks a year", I said, not 
without some pride. Three years ago I had started on a monthly 
remuneration of one hundred marks. 

"How much?” he queried incredulously. I explained: “Six 
thousand marks as manager of the Handelsvertrr^sverein, two 
thousand eight hundred from journalism.” Miiller shook his head. 

“Why, even our chief clerks don’t earn as much,” he said. 
“I can’t possibly pay you more than one of the Bank’s chief 
clerks 1” 

"Pay me what you consider fair, sir, and don’t worry. A year 
hence I feel sure you will be paying me the same as I have been 
earning hitherto.” 

He agreed. And my prophecy was also fulfilled. 

My work in the Dresdner Bank brought me more than ever into 
personal contact with pretty well all the most important bankers of 
the day. My connection with Georg von Siemens had already 
provided me with my first acquaintances. Georg von Siemens had 
been one of the great initiators of collaboration between banks and 
industry. In 1868, while quite a young man, he had gone to Teheran 
at the request of his famous cousin, Werner von Siemens, to 
participate in the construction of the great Overland-Telegraph 
system of the Indo-European Telegraph Company. It is certainly 
thanks to this first experience of the East that Georg von Siemens 
turned his attention to Turko-Arabian affairs with outstanding 
success. Anyone who has once come under the spell of the East 
can never tear himself away. 



I meet some of the Big Bankers gg 

On his return Siemens, together with Bamberger and Steinthal, 
founded the Deutsche Bank. Once, on a subsequent occasion, he 
remarked mockingly that when the Bank was founded he had first 
to look up in the dictionary the difference between “paper” 
(i.e. bills for discount) and “money” — ^two conceptions which are 
familiar to every bank employee. It cannot have done his banl? 
harm however, for in the course of the next thirty years it became 
the greatest undertaking of its kind in Germany, 

It was the principal rival of the Discount Company, which by 
reason of its past history was more steeped in tradition and there- 
fore probably somewhat more ponderous. At the time when I 
was dready President of the Reichsbank it was absorbed by the 
Deutsche Bank; in addition to these two banks was the third 
D-Bank, the Dresdner, under the impetuous direction of Eugen 
Gutmann who, for all his daring, always succeeded in steering his 
ship safely through the chances and changes of business so that 
today it stands as firmly as ever; while the fourth D-Bank, the 
Darmstadt, first amalgamated with the Nationalbank under the 
title of Donat and finally gave up the ghost in the crisis of 1931, 
being taken over by the Dresdner Bank, 

We have to thank the leading Bankers of Berlin for many an 
apt remark which has passed into economic history, not only bons 
mots but observations that frequently concealed a deal of truth. 
One of the best-known ripostes dated back to Georg von Siemens. 
Somebody once asked him what he would do if all the bank’s 
customers were to withdraw their money simultaneously. With his 
everlasting cigar between his lips Siemens retorted drily: “I 
should go out on to the balcony, turn round and show the people 
my backside.” A pungent answer to an absurd question: it is 
highly unlikely that everyone would suddenly want to withdraw 
all their money from a perfectly sound bank. What would they do 
with the money ? At best they would deposit it in other banks and 
from there it would again be redistributed. Hoarded money is no 
good to anyone since it achieves no business turnover — ^which, 
when all’s said and done, is what money is for. 

My chief, Eugen Gutmann, was not merely a very clever and 
resourceful banker, but a man whose generous nature benefited not 
only the bank’s customers but also the staff. After I had success- 
fully concluded my first difficult bit of business — ^the negotiation of 
a big foreign loan on the Berlin Stock Exchange — ^he handed me a 
thousand-mark note as a special bonus. That was my first “inille 

One of the leading bankers who rendered outstanding service 
to German industry was Karl Ehrstenberg, owner of the Berliner 



100 


My First Seventy-Six Years 

Handekgesellschaft. This Company had never gone in for branch 
offices : its one and only establishment in Berlin concentrated its 
energies on main ta i nin g contact with a large number of German 
industrial undertakings, and participating in the financial trans- 
actions of several foreign countries. For instance, the introduction 
of Serbian loans on the Berlin Stock Exchange can be traced back 
to Fiirstenberg. His Berliner Handelsgesellschaft was concerned in 
all the biggest foreign deals, among them incidentally the negotiat- 
ing of tfc Russian loans, introduced by Mendelssohn & Co.’s 
banking establishment in Berlin ; similarly with the introduction of 
the Mexican loans under the aegis of BleichrSder & Co. 

The Berliner Handelsgesellschaft was a limited liability company 
in which the partners were responsible to the extent of their 
private means. That is why, on one occasion, Fiirstenberg replied 
to a man who addressed him as Herr Direktor-* 

“I am not a manager. I am responsible for the management.” 

Many Stock Exchange witticisms are attributed to Fiirstenberg, 
including some that he probably never uttered. When asked if he 
were related to the titled family of Fiirstenberg-Donaueschingen 
he replied; “No, that’s the other branch.” 

He disliked titles and outward show. Flis supposedly best hon 
mot was in connection with the “Hibernia” case of which more 
later. An emissary from the Imperial Court called on him and 
enquired whether Karl Fiirstenberg set greater store by an order or 
a title. 

“A title”, said the banker. 

“What sort of title had you in mind?” asked the other. 

“There is only one title you could give me — and you can’t give 
me that.” 

“But what sort of title is that?” enquired the emissary. 

KonsistQrialratl”^ said Karl Fiirstenberg. He was a Jew and 
never attempted to conceal the fact. 

Another liighly esteemed Banker of that time was Franz Urbig 
of the Diskmtogesellschaft. He had started as Clerk of the Court and 
by his exceptional ability had worked his way up to a managership. 
For a long time he had been with the German-Asiatic Bank in 
China and possessed the most extensive information on foreign 
matters of anyone in the Diskontogesellschcft, The financing of the 
Chinese Shantung Railway was first and foremost in his hands. 

In my own Dresdner Bank Henry Nathan was remarkable for 

* Manager, not Director. The German word for Director as we 
understand it is Vmoalter. 

•I The nearest English equivalent would be “Ecclesiastical Council- 
lor” — ^literally “Councillor of the Consistory”. 



I meet some of the Big Bankers loi 

his efEciency. He belonged to that category of bankers who, like 
Urbig, had risen in their profession without any influence from 
outside. I have never met another bank manager who was so well 
informed on such a variety of subjects as Henry Nathan. Whereas 
the majority of managers were wont to specialize in this or that 
department, there was no single bank transaction that Henry 
Nathan could not have mastered practically in every detail. 

The above-mentioned men represent an essential section of the 
older generation of leading bankers in my young days. It is due to 
them that Berlin achieved a position in the world of international 
finance and banking on the same level as London, New York and 
Paris. It is due to them also that the Berlin Stock Exchange 
acquired an international reputation, and its quotations and 
turnover came to be regarded in the same light as those of other 
Stock Exchanges. 

Today people are all too prone to disparage the importance of 
Exchanges in matters economic. It was, of course, unavoidable that 
there should be widespread gambling on ’Change. But that should 
not cause us to underrate the significance of a capital market, 
organized according to Stock Exchange rules, for the financing 
of a country’s whole economic system. 



CHAPTER TWELVE 


The Dresdner Bank 

M y appointment to the Dresdner Bank could be traced 
to the experiences of that establishment in the crises of 
1901. At that period the Leipziger Bank, an old, highly- 
respected, Saxon institution, had crashed through granting 
excessive credit to a cranky industrial undertaking. 

The whole affair was typical of a bank crash caused by recldess 
extension of credit. The factory that actually managed to achieve 
the ruin of a financial establishment such as the Leipziger was the 
Kasseler Treher-Trocknung (Knssel Residue-Drying Works), and 
its foundation must surely have been sponsored by hare-brained 
speculators instead of engineers. The idea was to utilize the residue 
of wine and brandy distilleries, and for this purpose the manage- 
ment borrowed considerable sums from the Leipziger. When, 
later, it transpired that the Trebertrockniing Works was not func- 
tioning the (Erectors of the bank furnished additional funds to 
maintain production. The result was complete collapse, a run on 
deposit .accounts by the bank’s customers, and finally an announce- 
ment that the Leipziger Bank was insolvent. That was where the 
enterprising Georg von Siemens came in. Together with his 
Deutsche Bank he took over the Leipziger on very favourable 
terms and within twenty-four hours had opened a new branch of 
his bank in the selfsame offices. The customers who received their 
money calmed down, the run on the bank ceased — ^so did the 
Leipziger Bank. 

The Dresdner Bank, officially established in Saxony, was heavily 
involved in this crash. Confidence in Saxon undertaldngs had 
suddenly vanished; the Press began to focus its attention on the 
third largest bank in Germany and criticised it severely. But 
Eugen Gutmann, the managing director, succeeded in bringing 
his ship safely through the storm, and the outcome of the affair 
was a desire for closer contact with the public. 

Nowadays the importance of such a duty is recognized and 
provision for public relations made by all the bigger undertakings. 
At that period, however, it first fell to my lot in the Dresdner 
Bank, and I tackled it with a will. 

Among the newspapers whose attitude to the Dresdner Bank 



The Dresdner Bank 


103 

was particularly critical — and not always strictly impartial — 
was the Berliner Morgenpost. No sooner did the Dresdner Bank 
offer any shares or bonds than one could be sure some disparaging 
comment would appear in the Morgenpost. The publishers on the 
other hand were very glad to receive advertisements of such shares 
and bonds from the various banks for their advertisement 
columns. The Morgenpost's critical attitude to the Dresdner 
Bank, therefore, in no way prevented the paper from steadily 
canvassing the bank for advertisements. When I realized this I 
determined to bring matters to a head and categorically refused to 
insert any further advertisement in the Morgenpost. Since I felt 
myself to be in a very independent position I took this step without 
informing my management. I had not long to wait for results. A 
letter of protest from Louis Ullstein, the head of the publishing 
firm, was received by my board and I was requested to furnish an 
explanation to Eugen Gutmann. I asked him to leave the conduct 
of the affair in my hands and he agreed. I immediately announced 
my intention of calling upon Herr Ullstein. 

The house of Ullstein was at that time a power in the world, and 
the name of its head carried considerable weight. All the same I 
was not disposed to submit to intimidation. 

I had first of all to listen to a lecture by Herr Ullstein in which 
he explained that one could not well refuse to advertise in so 
important a newspaper as the Morgenpost and continue to do so in 
the other papers. I interrupted this homily by remarking that 
other papers were essentially less prejudiced against the Dresdner 
Bank. 

“It is part of the freedom of the Press to be as critical as their 
editors think fit”, said Ullstein loftily. “In addition, Doctor 
Schacht, you should know that the advertisement and editorial 
sections of a newspaper are two completely different departments 
which have nothing to do with each other.” 

If he imagined he had caught me out he was mistaken. I 
replied with an argument of the validity of which I remain con- 
vinced to this day. 

‘ ‘ What would you say, Herr Ullstein, if in certain Berlin advertis- 
ing columns you inserted an advertisement ‘Buy the Morgenpost 1* 
and immediately below someone regularly followed it with — 
‘The worst newspaper in Berlin!’ Would you- continue to spend 
good money advertising in those columns ? ” 

“But that is not the same thing”, he said, somewhat astonished. 

I went on: 

“How can you expect me, Herr Ullstein, to let expensive inser- 
tions appear on the third page of the Morgenpost, advertising the 



104 My First Seventy-Six Years 

issue of shares or bonds, when in the fourth page your financial 
editor refers to these same issues as being an inferior investment ? ’ ’ 

I was in a strong position and he recognized it. Of course I knew 
as well as he did that the advertising and editorial departments of 
a newspaper are two quite different pairs of shoes. For years I had 
made an intensive study of journalism and I knew that this depend- 
ence on the advertiser is a canker at the heart of the free Press. 
But to go into all that would have been much too complicated. 
I preferred to keep to simpler, more efficacious methods. 

And I achieved my object. Peace was i-estored and maintained 
between the publishers of the Morgenpost and the Dresdner Bank. 
Later, I was on excellent terms with Ullstein’s. Apart from any- 
thing else, Franz Ullstein, Louis’ brother, had been a member of 
my club in our student days. It is an indisputable fact that Ull- 
stein’s have done a tremendous lot to establish the reputation and 
importance of the German Press. I was genuinely glad when the 
news reached me that they had resumed work in 1951 . 

A second task that fell to my lot in the Dresdner Bank was the 
preparation of prospectuses for the issue of securities to be offered 
on the Stock Exchange, Anyone wishing to have shares or bonds 
officially quoted on Berlin ’Change, i.e, under State supervision by 
an accredited broker, was obliged to have these securities approved 
by the ZulassimgssteUe an der Berliner Borse (Office of Acceptance 
on the Berlin Stock Exchange). For this purpose his bank represen- 
tative would submit a prospectus for publication which had to 
contain an exact description of the species and character of the 
securities as well as of the issuing establishments, i.e. industrial, 
transport or commercial undertakings, prcrvincial and other public 
corporations, mortgage-banks, etc. 

’These prospectuses often ran into half a dozen printed pages and 
the greatest care was taken to see that all particulars essential for the 
assessment of the securities concerned were included. They were 
compiled, therefore, in closest touch with the issuing firm or 
corporation in question. 

In this way I became connected with a large number of such 
establishments ; I learned to read and evaluate balance-sheets and 
cleared up ambiguities ; I got to know how the various undertakings 
managed their business affairs; I became absorbed in municipal 
and national budgets and gained an insight into the administration 
of public monies. During my thirteen years with the Dresdner 
Bank we did not issue a single prospectus that I had not prepared. 

I soon became so experienced in my particular province that 
smaller banks occasionally approached my board and requested 
that I might prepare prospectuses for them. One result of these 



The Dresdner Bank 


loS 

activities was that a few years later I myself was elected a member of 
the Zulassimgsstelle der Berliner Borse. 

In addition to this branch of Public Relations and the prepara- 
tion of prospectuses, I chose a third occupation in which I could 
put my previous learning to practical use. Each of the big banks 
possessed at that time a so-called record ofHce in which were 
stored the business reports of most of the limited companies, 
budgets of public corporations and similar material. 

Since my Paris days I knew that some of the principal French 
banks, in addition to this special material, collected and made use 
of general economic data. Within certain limits the record-keepers 
of the German banks had likewise launched out in this direction. 
My ambition was to enrich the Dresdner Bank’s collection of 
literature relating to political economy and make use of it in the 
interests of our clientele. I began with the publication of monthly 
surveys of the development of German — and some foreign — 
economic systems which I had put together in the form of short 
statistical summaries. These reports were regularly enclosed with 
letters to our customers and were soon the subject of enthusiastic 
comment. Nowadays this sort of economic information is published 
by all the big banks as a matter of course. In addition to purely 
statistical surveys there are market reports and reports from other 
countries dealing with economic conditions abroad, tips for the 
export trade and similar relevant data. 

But however interested I might be in all these things, my over- 
whelming ambition was to go in for the actual practical side of the 
banking business, and a few years after I had entered the bank the 
board granted my request. For a whole year I was allowed to work 
in every department of the bank in succession so as to become 
thoroughly at home in actual banking practice. Nor did I drop any 
of my usual work : I simply doubled my working hours by making 
use of the early morning, before we opened, the midday break and 
the evening ^ter closing time, to tackle those matters generally 
dealt with in normal office hours. I saw precious little of my family 
and enjoyed precious little sleep during that year, but by the end 
of it I was familiar with every department of the banking business. 
In the course of those months I not only worked at correspondence 
and bookkeeping, and leai'nt how to safeguard and administer 
stocks and shares, but I also acted as cashier and served the public 
over the counter, discounted bills and calculated foreign drafts — 
in short, there was no section of the bank of which I had not had 
practical experience. 

The final feature of this apprentice year was attendance at the 



io6 My First Seventy-Six Years 

Stock Exchange, I had to learn to find my way about this witches’ 
cauldron ! I was of course not entirely unfamiliar with the rooms 
and the general goings-on; my work on the prospectuses had 
already involved my visiting the Stock Exchange. Now, however, 
I learned how to buy and sell securities, and how to deal with 
brokers and with customers. 

The Berlin Bourse was a magnificent building. At midday 
hundreds of dealers in stocks and commodities assembled in the 
three vast halls. In the centre were the enclosures behind which 
the accredited brokers would determine the prices according to the 
supply and demand. Along the walls were the tables of the banking 
houses and commodity buyers. On busy days it was pandemonium ; 
when we were slack we beguiled the time with talk and jokes. When 
a newcomer to the Stock Exchange turned up he would be well 
and truly ragged — e.g. one of us would pin a piece of paper, with 
some silly nonsense on it, to the back of his coat, or try some other 
trick. Nor did I escape. On one of my first days there, as I was 
standing in the front of the crowd close to the barriers, I suddenly 
felt somebody tickling the back of my neck. Quick as lightning 
I slewed round and seized one of the fellows standing behind me by 
the chin and shook his head back and forth. The laughter of the 
spectators told me I had caught the right man. Henceforward I 
was accepted by the Stock Exchange haUtnis as one of themselves. 

Later I became a well-known figure on ’Change, largely, I 
gather, on account of my Friesian gift of repartee, stories of 
“Schacht V. Fixrstenberg” were current, of which the following 
may serve as an example : 

Schacht and Furstenberg on the steps of the Stock Exchange, just 
about to leave. 

“How’s things, Herr Furstenberg?” asks Schacht, “Shall we 
jump into a taxi?” 

“Herr Schacht,” replies the ready-witted Karl Furstenberg, 
“whenever I see you I always jump!” 

Sh non. h veto k hen trovato.* I for one cannot recall the con- 
versation. 

The first time I walked through the Stock Exchange in search of 
a certain firm and, when asked for whom I was looHng, gave the 

* “Wie steht's, Herr Furstenberg?” fragt Schacht. “Nehmen wir ein 
Taxi undfahren vnr isusammen?” 

“Hen Schacht,” erwidert der schlagferHge Karl FUrstenburg, “wem 
ich Sie seh’,fahr’ ich immer smsammenl” 

The joke lies in the play on the word zusammeitfahren which means 
cither “to drive together” or “to start (or jump) with fright, surprise, 
terror, etc,” 



The Dresdner Bank 


107 

name, I was told: “Oh — so you’re dealing with that fellow! 
Well, mind you keep your pockets tight shut.” 

And here is the smartest witticism I ever heard concerning an 
operator on ’Change : 

“Herr Meier is the most honest man on the Berlin Stock 
Exchange.” And in reply to an enquiring and surprised look: 
“He looks like a rogue — and he is one!” 

I have always emphasized the essential need of the Stock 
Exchange. It is an organized market that keeps money in circula- 
tion and makes possible the financing of domestic undertakings 
through the sale of securities. Where there is no efiicient Stock 
Exchange the whole economy suffers from lack of financial 
opportunities. This affects not only commerce and industry but 
also public bodies who depend on the negotiation of loans. I 
have never had any use for the speculative activities of those 
people whose one ambition is to buy securities cheaply and sell 
them again as quickly and as dearly as possible. Throughout my 
whole life I have eschewed any kind of Stock Exchange speculation. 

The most popular media for speculation were the account- 
transactions which did not have to be settled until the end of the 
month, and consequently afforded the opportunity of making a 
profit on a deal — ^whether purchase or sale — by a second sale or 
purchase. Although I can look back today on fifty years’ banking 
I can say vsrith satisfaction that I have never indulged in such a 
transaction on my own behalf. 

Not least among the huge losses we suffered through the col- 
lapse of 1945 must be reckoned the elimination of the German — 
and particularly the Berlin — Stock Exchange. It is not only our 
entire German economy which is affected by the loss of this 
capital-market organization, but communities, Lander, the Federal 
Republic and German pubUc corporations. We are hampered at 
every turn by lack of money for the most urgent investments, and 
any funds that may be available or that can possibly be raised are 
dissipated and frittered away for want of a central market organiza- 
tion. Even greater perhaps is the loss of international influence and 
prestige which German Exchanges enjoyed prior to tlie catastrophe 
of the Second World War, 

It is due to my year of apprenticeship in the banking business 
that at the age of thirty-two I was already nominal manager of the 
Dresdner Bank, and was promoted to branch management. 

A particularly happy occurrence — so far as I was concerned — 
was the conclusion or a deal in 1905 between the Dresdner Bank 
and the New York banking firm of Morgan & Co. On our side the 



io8 My First Seventy-Six Years 

negotiations were in the hands of Eugen Gutmann’s son-in-law, a 
member of our board. His name was Hans Schuster, he was of 
Swiss nationality and his father was the celebrated builder of the 
St. Gotthard Railway. He probably owed his position in the 
Dresdner Bank to his marriage to Gutmann’s daughter, who was 
not only a beauty but an extremely gifted woman. By a curious 
coincidence we had another Swiss on our Board — Baron von 
Steiger, a member of the well-known titled family. 

One morning Schuster sent for me. 

“Doctor Schacht,” he said abruptly, “I propose to go to New 
York on the Bank’s business and need a secretary. Would you care 
to come along?” 

No one was more delighted than I, nor did I withdraw when 
Schuster questioned me as to my knowledge of English. My reply 
was perhaps rather more confident than strictly accurate. The 
desire for a glimpse of yet another section of international political 
economy was mingled with curiosity as to the country to which 
I owed my Christian names of Horace Greeley. 

Among the passengers on the outward voyage were some dis- 
tinguished artists of whom Caruso is probably the only one to be 
remembered. There were also two other well-known tenors, 
Dippel and Einothe, and the celebrated opera singer, Frau Gadsky. 

I must be one of the few remaining Germans who can still boast 
of having played shuffleboard with Caruso, I was beaten by the 
man with the famous voice. 

At the so-called “Captain’s Dinner” the evening before we 
landed everyone was, of coxurse, keen to hear Caruso sing. But the 
three tenors, as good professionals, had agreed among themselves 
that they would not sing. So we heard Frau Tauscher-Gadsky’s 
glorious voice. 

Schuster was no stranger to the United States and therefore 
had no reason to prolong his stay in New York. He was kind 
enough, however, to give me a Sunday off so that I might see the 
Niagara Falls, which in those days were considered among the few 
American sights really worth seeing. Since then many others have 
been added to their number. Schuster devoted one day to going 
to Washington to pay his respects to President Theodore Roosevelt, 
and I was invited to accompany him. Then, on the occasion of my 
trip to Washington in 1933, I was able to tell President Franklin 
Roosevelt that I had visited his uncle in these same rooms twenty- 
eight years previously. 

But even greater than the “Thundering Waters” of the Indians 
and the “Thunderer” at the White House was the impression 
made upon me during the seven days I spent in the offices of 



The Dresdner Bank 


log 

Morgan & Co. The firm at that time was still housed in the old, 
low, corner building on Wall Street, which in the meantime has 
given place to a vast structure in the most modern style. The 
entire office was contained in a single room on the ground floor 
in which were dozens of desks where the employees worked, a 
small room for the heads being screened off from the whole by 
glass half-way partitions. No question of visitors being formally 
announced, no waiting, or anterooms. Anyone who saw that a 
principal was disengaged could walk right up to his desk. Relations 
between heads and employees were very informal and free-and- 
easy without thereby lacking in respect. 

The principals took their meals together in a small room where 
Schuster and I joined them, an intimate association which enabled 
me to meet them all. So far as I know, not one of them is alive 
today. The last time I saw Morgan’s son. Jack, was in 1930 at The 
Hague, and that first-rate fellow Thomas Lament at Heidelberg 
in 1934 . 1 spent four months working with Jack at the Young Plan 
Conference in Paris in the spring of 1929. Despite his kindness and 
charm he never attained his father’s greatness. 

In 1905, when Schuster and I were in New York, old John 
Pierpont Morgan was at the height of his fame. By his unparalleled 
far-sightedness he had guided the firm to a position of extraordinary 
wealth and influence. I once asked him to what he attributed his 
firm’s amazing rise. His reply was entirely characteristic of the 
man and throughout my ensuing years of work I have invariably 
found it a good guide. “I have always”, said Morgan, “had faith 
in the economic future of my country.” 

In outward appearance he was a giant, broad-shouldered and of 
Herculean stature. His son Jack inherited his figure. His somewhat 
rough-hewn face was characterized by an unusually large, fleshy 
nose. I have only seen one other nose like it and that was August 
Thyssen’s before he had it operated on. The contrast between that 
Cyrano-lilte nose and the wise, kind eyes was all the more astonish- 
ing. Everyone who talked with Morgan came under their spell. 

One of the most interesting examples of business which at that 
time were being carried on in Germany was the attempt by the 
State of Prussia to acquire a controlling interest in the “Hibernia” 
coal mines. The reason for this was probably the desire to secure 
the coal output for the State Railways on terms which wotild be 
unaffected by fluctuations in prices. Mdller-Brackwede, at that 
time Prussian Minister of Commerce,* entrusted the Dresdner 

• The equivalent of President of the Board of Trade. 



no 


My First Seventy-Six Years 

Bank with the confidential task of buying up the “Hibernia” 
shares for the Prussian Treasury according to Stock Exchange 
procedure. 

Although the job was carried out with the greatest secrecy and 
as unobtrusively as possible there was no concealing the fact that 
there was a regular buyer for “Hibernia” shares. The prices of the 
shares rose gradually, but steadily. The Berliner Handelsgesell- 
sche^t, which conducted all the “Hibernia” financial business, began 
to smell a rat. Karl Fiirstenberg was not so devoted to the Govern- 
ment as all that, nor was he the man to stand quietly by and let a 
brother banker make off with the Hibernia Company. It was far 
too important a deal to allow Eugen Gutmann of the Dresdner 
Bank to get away with, so, together with other banks who were 
interested, he began to buy, and before long there was a race in 
which no one knew which of the two banks would eventually 
acquire the controlling interest. The financing of the purchases 
gave rise to difficulties — ^not for the Dresdner Bank, which was 
able to draw on State funds, but for the Berliner Handelsgesell- 
schaft and its associated banks. 

Then Karl Fiirstenberg came to the rescue with an idea that 
amounted to a stroke of genius. His group’s holding of “ Hibernia ” 
shares was turned into a limited company, Herne G.m.b.H, With 
these shares as security Heme G.m.b.H. issued a 4 per cent, public 
loan, with the proceeds of which the banks were able to resume their 
activities. 

When matters came to a climax, Fiirstenberg was found to be 
victorious. The controlling interest remained in his possession. 
The Government made ffie best of a bad job and closed the 
matter by investing Herr Karl Fiirstenberg with the Third Class 
and Herr Eugen Gutmann with the Fourth Class of the Order 
of the Red Eagle. 

Another financial transaction in which I took part in the 
Dresdner Bank was especially typical, for it shows how, in the 
Germany of that time, banking and industry co-operated to further 
the export trade. 

The matter in question concerned the erection of the first big 
electric power station on the Witwatersrand in South Africa. A 
company had been formed in England whose aim was to exploit 
the gigantic water power of the Victoria Falls on the Zambesi, and 
the Allgemeine Elektrizitdts-GesellscJiaft (General Electric Com- 
pany) in Berlin had been asked to investigate the project. As a 
result it transpired that to instal a turbine plant at the Victoria 
Falls, and a long-distance connection from the Falls to the m ining 
district of Johannesburg, simply would not pay. On the other 



The Dresdner Bank 


III 


hand, utilization of the vast quantities of Witwatersrand coal by 
means of a steam plant promised to be economically successful. 
The Victoria Falls Company therefore entered into a contract 
with the A.E.G. for the erection of a power plant on the Witwaters- 
rand coalfield, while the company retained its attractive name as 
bait for future shareholders. The necessary capital was raised in 
Germany by means of a loan issued by the Dresdner Bank and the 
A.E.G. order paid for out of thcproceeds. The Company has greatly 
increased its scope and still functions as a distinctly paying con- 
cern, while the immense masses of the Victoria Falls continue their 
headlong descent unmolested, as before. 



CHAPTER THIRTEEN 

The Near East 

I N spite of the bicycle on which I spent such a disproportion- 
ately large sum as a fifth-former in 1893, my favourite exercise 
all my life has been walking. It is thanks, first and foremost, to 
the walking-tours I have made during my life that I am able, at the 
age of seventy-six, to smoke my daily cigars with impunity and re- 
main untouched by all the diseases of civilization usually attendant 
on a sedentary existence. 

As a third-term student I followed up the end of my stay in 
Munich by a walk right across the Alps as far as Milan. Important 
as this feat appeared to me at the age of nineteen, it was a mere 
stroll compared with another tour in 1902, from Vladikavkas over 
the Caucasus to Tiflis, on to Echmiadzin, the seat of the Armen- 
ian Patriarch, and back again over the icy Caucasus by the Becho 
Pass to the Black Sea port of Novorossisk. 

Of the three Oriental trips I made between 190a and 1909 this 
was by far the most strenuous and at the same time the loveliest. 
Paul Rohrbach had organized it and collected a group of nine 
young fellows. One of them was Hello von Gerlach, the only 
deputy who had been sent to the Reichstag by Friedrich Naumann’s 
Nationakoxialer Verein (National Social Union) in 1896. The 
remaining six were likewise members of Naumann’s set. There is a 
delightful and graphic account of our expedition from Rohrbach’s 
pen in some old back numbers of Die Zeit^ the first magazine 
published by Naumann between 1901 and 1903. 

Paul Rohrbach, the well-known journalist and politician, was at 
that time thirty-three years old and a friend of Naumann whom I 
also knew. Friedrich Naumann and his teacher Stoecker were 
Evangelical social reformers, but while Stoecker was a conserva- 
tive, Naumaim betook himself and his ideas to the liberal-minded 
groups. After the First World War Naumann exercised consider- 
able influence in the drafting of the Weimar Constitution. He died 
in 1919. One of his surviving pupils is Theodor Heuss, now 
President of the West German Federal Republic. 

I have never belonged to Naumann’s set even though I was inti- 
mate with one or two of them, A group whose purpose is to bring 
together such opposite sections of society as industrial workers and 



The Near East 


"3 

members of conservative circles must realize clearly that such an 
aim is incompatible with the policy of “ not wisliing to give offence ’ ’ . 

From the point of view of party politics it is difficult to reconcile 
such confficting ideas as conservative Christianity, monarchist 
tradition, national self-assertiveness, tolerance, liberal-minded 
progress and social justice. It was therefore inevitable that Nau- 
mann’s followers should very quickly split up among the various 
political parties. His own pupils landed up partly among the Social 
Democrats, partly among the freethinkers or other more right- 
wing groups. The men belonging to the Naumann set were decent, 
well-intentioned fellows whom one was glad to number among 
one’s friends, but their mentality was not such as to inspire 
passionate enthusiasm. 

^^^Rohrbach’s description of our travels began as follows: 

‘ ‘ From Berlin to the Caucasus there is now no end to civilization. 
It is true that the thread grows thinner and thinner . . . but it still 
holds — as far as the railway extends.” Written in 1902 this sentence 
contains some pointers which today seem to us very prophetic. 

Hello von Gerlach was throughout the trip the life and soul of 
the party. Although older than any of us, as years go, he remained 
indifferent to cold, hunger and the frightful cloud-bursts that 
repeatedly drenched us; even the loss of his knapsack, stolen by 
some light-fingered rascal, was not sufficient to upset his usual good 
temper for more than a minute or so. When I met him again many 
years later I was shocked by the changes that the war had wrought. 
Old, embittered and lonely, he was engaged in working out queer 
radical social programmes and had quite lost touch with the out- 
side world. He was a wonderful companion, firmly rooted in the 
peaceful years before the war. 

Rohrbach had begun by studying theology. In addition to an 
extensive education he had a keen eye for realities. Midway between 
Russia and Turkey, those two great world-philosophic antagonists 
of medieval times, he took careffil note of all fortifications and drew 
my attention to the wretched state of the batteries along the 'Turk- 
ish coast — ^which I was later to see for myself. I was astonished at 
the perspicacity with which he sized up the chances of those two 
opponents on die shores of the Black Sea. 

“Nowadays (1902) a Russian fleet could occupy the Bosphorus 
and take Constantinople before the Western Powers even knew 
that the Imperial Fleet had left Odessa”, he remarked once. The 
three miserable vessels which at that time constituted the Sultan’s 
entire fleet would have had litde chance of withstanding an attack. 

This was before the . Turkish Revolution by which conditions 
on the Bosphorus were radically altered. When only six years 



j My First Seventy-Six Years 

afterwards I visited Turkey, I found that a start had already been 
made of a new, energetic policy under the leaders of Young 
Turkey. The “Sick Man of Europe” had begun to recover. 

The memory of that Caucasian tour remained with me for a 
long time. When a year later I married, my wife wanted me to tell 
her some of the details. Didn’t we have some funny experiences? 

“Oh yes,” I said. “The funniest thing that happened on that 
trip was meeting a Russian mining engineer who was prospecting 
for silver. He joined us in a drink and sang Russian songs . Then he 
insisted that we should sing German songs with him. Unfortunately 
he knew only one, so we all sang it over and over again.” 

“And what was the song?” 

“Die Wacht am R]tein\ Imagine it — ^in the middle of the icy 
Caucasus!” 

Nowadays it sounds like a profoundly serious fairy-tale. 

After this mighty journey my next trip — ^to the Balkans — ^in 
1906 was a mere saunter. I had asked my father to come with me. 
We went through Montenegro, Bosnia and Herzegovina. I was 
twenty-nine years old at the time and had successfully concluded 
my first banking deals. While we were mooching through these 
countries which to us western “progressives” seemed very behind 
the times, my mind was on economic problems. “At bottom they 
are the same as ours”, I remarked eventually to my father, 

“Think so?” he asked. “I have the impression that they’re still 
living in the good old days. Plenty of handicrafts, few factories, 
bad roads, hardly any railways, and no banks.” 

“Yes,” I replied, “that’s true. Outwardly everything is very 
diflFerent from what it is at home. But take the fundamental pro- 
blems. They’re more in evidence here because they’re simpler. 
There is less luxury among the ordinary folk, fewer superfluous 
possessions, but at bottom they are human beings like you and me 1 
What they don’t provide themselves they have to buy. That’s 
why they’re keen to earn money. The mountain peasant sells his 
cheese in order to buy grain for bread. The sheep farmers sell the 
wool and buy food with the proceeds. Admittedly food is cheaper 
than with us, their wants are fewer — ^therefore they need less money. 
But they do need some money. It’s exactly the same with transport. 
They have to move their goods from one place to another — ^there- 
fore they build roads. There isn’t the same turnover of goods as in 
our industrial Germany, so they are able to let their roads remain 
in worse condition; but they can’t do without them. They have 
their holidays and their bad seasons — ^therefore they must make 
some kind of planned provision . . . just like us. Everything is the 
same as it is at home— -it’s only the standards that are different.” 



The Near East 


”5 

“If you put it like that,” said my father, “you’ll find your 
fundamental economic problems even among the Blackfellows.” 

“I’m convinced I should find them among the Blackfellows”, 
I said. “Civilization creates no new problems— it merely intensifies 
the age-old ones, the eteimal problems of mankind.” 

When in later years I was confronted with economic tasks that 
seemed to be very complicated and obscure, I would picture to 
myself how those same problems would appear to primitive peoples. 
I would recall my remarks about the Balkan nations and the Cauca- 
sian tribes, and after a while I would invariably come back to what 
I might call the “fundamental factors of political economy”. 
The structure of the problem became clear — and with it also the 
possibility of tackling it. 

A permanent reminder of that summer trip to Bosnia was a 
Bosnian costume which I had had made to measure and wore at 
the Berlin Colonial Ball. It made a great impression on account of 
its genuineness. The Bosnian knee-breeches fit very tightly at the 
waist, but are cut very wide lower down, so that they are enormously 
baggy behind. No Berlin tailor would ever have achieved such a 
work of art. On the other hand I should hardly have found a 
Bosnian costume that fitted me at a theatrical costumier’s. I had 
been strolling through various bazaars in Sarajevo — ^little booths 
with a roof but no front wall. As I was passing a tailor’s stall it 
suddenly occurred to me to ask him how long he would take to 
make a costume. 

“When are you leaving?” the tailor asked. 

“The day after tomorrow”, I said. 

“I can let you have it by then”, said the expert, and took up his 
tape measure. “Come inside, sir. I’ll measure you right away. 
Please take off your breeches.” 

I took off my breeches and he measured me. The news spread 
like wildfire that a visitor from far-off Germany was in the tailor’s 
shop, standing in his underpants. The inhabitants of Sarajevo felt 
that was too good to miss. 

Whether the Bosnian tailors always require so much time for 
taking measurements or whether this one was unwilling to spoil 
his fellow-countrymen’s enjoyment on this one and only occasion, 
I have never been able to discover. Anyhow, I stood for a long 
while in my scanty attire in front of a large crowd who lost no 
opportunity of contributing good advice. But the costume was well 
worth the prolonged measuring. It fitted perfectly. With chibouk* 
and fez I need not feel ashamed of appearing at the Colonial Ball. 

* Long-stemmed Turkish pipe. 



ii6 My First Seventy-Six Years 

In 1908 I had joined a Freemasons’ Lodge. Freemasonry runs 
in my family. My father belonged to an American Lodge. My 
great-grandfather Christian Ulrich Detlev von Eggers, was one of 
the Masonic notables of the Age of Enlightenment. 

Neither the ceremonies of admission to the old Prussian Lodge 
Urania sur Vitsterblichkeit in Berlin, nor my later experiences in 
Freemasonry have ever been able to convince me that my German 
Lodge was a dangerous international organization which com- 
pelled its members to submit to some satanic ritual. That kind of 
thing is part of that unpleasant gossip invented by certain people 
who gamble on the stupidity of the masses and their love of creepy 
stories. The Freemasons were once a community — a community 
which set its face against any kind of religious intolerance. Their 
warlike actions date back to the Age of Enlightenment. When the 
struggle was over, the importance of the Freemasons also dimin- 
ished. What the Lodges preserved was the law of humanity and of 
friendly social activity. 

That the Freemasons in other countries did undoubtedly some- 
times take an active part in politics I learnt during a trip to Turkey 
with Rohrbach and Ernst Jskh in 1909. My Berlin Lodge had 
^ven me the address of a chemist who was a Freemason and lived 
in Salonika. As I could not get my bearings, I went into a shop in 
the main street and asked the way to the chemist’s house. In less 
than ten minutes the shop was full of dozens of men, all of them 
Freemasons, who asked what they could do for me. At one stroke 
I had made contact with numerous inhabitants of this foreign city. 
This turned out to be very useful ; my new friends initiated me into 
the background of the Young 'I\irks Movement and their war 
agamst the absolute Sultanship of the Porte. 

In this way I leamt that all the leaders of the Young Turks were 
Freemasons and their secret meetings took place under the pro- 
tection of the Lodge — ^the only place where they were safe from 
spies. 

The incident made me thoughtful. I recognized that Free- 
masonry ^not, admittedly, in Germany but in other countries — is 
sometimes used for politick purposes and I understood the reason 
for the dislike of Freemasonry in certain circles. Nevertheless I 
must once again emphasize that conditions in Germany are differ- 
ent. Tne Freemasons in the Old Prussian Lodges supported the 
id^ of the preservation of the State through the monarchy. 

From, Salonika our road led to Constantinople, where we met 
^st of me leasts of the Young Turks— men like Mahmoud 
Shevket, Enver, Talaat, Javid, Jemal and others . . . names th^t 
today are almost forgotten. 



The Near East 


117 

What I did bring back with me from this trip — ^in addition to a 
Turkish decoration and a multitude of impressions — ^was a most 
unpleasant malaria which, curiously enough, did not attack me 
until after my return, when it did so with a vengeance. As the 
doctors were at a loss to luiow what to do about it my condition 
grew worse from day to day and I narrowly escaped blaclrwater 
fever. Luckily my brother Eddy came and took charge of me, and 
dismissed the three highly distinguished Berlin specidists who had 
been treating me. Together with Philalethes Kuhn, the celebrated 
authority on tropical diseases, who was sent by Rohrbach, Eddy 
managed to set me on my feet again, I have never had a recurrence 
of the trouble. 



CHAPTER FOURTEEN 


My Family 

O N the loth January 1903 I married Luise Sowa whom I 
had met at the Schlachtensee Tennis Club seven years 
previously. We had become engaged when I was nineteen 
and she twenty-one. Then, when I returned from my term at 
Paris University more than a year later, we broke it off ; we both 
realized that I was too young to commit myself. Our position was very 
similar to that of my father and mother — our first acquaintance 
was followed by a long separation. 

When after a lapse of five years I saw Luise again in the autumn 
of 1902, I already had an excellent position. I was earning more 
than my father and there was nothing to prevent my starting a 
family. Luise attracted me as much as she had done the first day 
we met. We resumed our walks by the Schlachtensee, skated 
together there, and were soon officially engaged. 

By that time Luise’s father had died. Inspector Sowa had for 
years served in the immediate Imperial entourage in Potsdam and, 
ostensibly during that period, had acquired an almost morbid dis- 
trust of all mankind. At any rate he kept an eagle-eyed watch on his 
two daughters. So long as he lived Luise and I had to resort to 
any amoimt of subterfuge to be able to meet in peace. There ai'e 
times when a Prussian detective-inspector’s unswerving sense of 
propriety can be very trying to a courting couple. 

\^en we met again Acre were no further obstacles to a short 
engagement. Luise the practical started looking around for some- 
where to live. When she had found a flat in Berlin-Friedenau that 
appealed to me we settled the date and were married, twelve days 
before my twenty-sixth birthday. 

During the drive to the Registrar’s ofiice I suddenly realized 
that I had forgotten to give the ring to the best man. The carriages 
containing the entire wedding party were proceeding at a com- 
fortable pace along the Berlin street. Being an impulsive sort of 
fellow I jumped up, clapped on my top-hat, hurled myself out 
of the carriage, da^ed dong with flying coat-tails to the one 
ahead, handed over the little packet and returned to my own 
carriage — ^to the great delight of the Berliners who made the most 
of the opportunity for facetious remarks. 



My Family ng 

The first year of our married life proved fairly eventful. I 
exchanged political economy for banking — and in November our 
first child, Inge, was born. 

The change-over to banking meant that I had to work very hard 
and had little time for my first family. In the morning I went by 
bus — slater by electric tram — ^to the Dresdner Bank, came home in 
the evening and sat down at my desk to write my book reviews and 
articles for the two Jalirbucher. 

I don’t think that as a husband I can have been easy to live with. 
It was not in my nature to settle down to a comfortable middle- 
class existence. Even today I am ambitious. In those days I was 
constantly on the look-out for some new line, or occupied with my 
own ideas. 

Luise displayed great understanding and appreciation of my 
work. She possessed the gift of being able to adapt herself easily 
to any circumstances ; she was an excellent housewife and deeply 
interested in all my doings. When, later, I abandoned my private 
life for politics and public service she took these changes in her 
stride. The slender, dark-haired tennis-player and skater of earlier 
years became with the passing of time a very distinguished and 
quick-witted society lady. Her hair went grey early — a silvery 
white that made a striking contrast to her dark eyes and eyebrows. 

Ours was a very friendly marriage. We visited friends or invited 
them to our home; now and then we gave a dance; we went to 
evening parties and regularly attended the Press Ball, one of the 
biggest social events of the year. In the summer we went for 
outings In the neighbourhood of Berlin, and during my holi- 
days travelled in France, Belgium, Holland, the Mediterranean 
countries and even, on a later occasion, the United States. 

In spite of these pleasant interruptions, however, the basic 
theme of our marriage was work. I have already mentioned that six 
years after joining the Dresdner Bank I became titular manager, 
and was later joint branch manager, while at the same time holding 
an additional appointment in the economic section. Our son Jens 
had been born a year previously. Both these events led to our 
building our own house — a small villa in Zehlendorf with a large 
garden, where we lived for fifteen years. 

After the first world war our family circle, was increased by the 
marriages of my two brothers. Eddy, the doctor, had married a 
Swedish girl, whom he later divorced, and I helped to support his 
children. Eddy somewhat resembled our grandfather, Doctor 
Heinrich August Theodor, who also did not bother over much 
about his sons’ education. 

About the same time my younger , brother Oluf returned from 



120 


My Pint Seventy-Six Years 

Africa. Oluf, who took entirely after the Eggers, had likewise 
married and until the outbreak of war had been an engineer in the 
Cameroons and South Africa. His long stay in the tropics, coupled 
with war service, had ruined his health. I found him a job in 
Berlin, but he did not remain in it for long. One day he entered his 
car and with his eldest son went for a drive out of Berlin. Out in the 
country he pulled up suddenly, got out, sat down in a ditch and a 
few minutes later was dead of a stroke. 

As Oluf was by no means well-to-do, the care of his children 
fell to my lot. 

When I went to India in 1939 I took Eddy’s eldest son, Sven, 
with me. He had considerable literary talent and wrote good verse, 
novels and short stories. Later he came up against the National- 
Socialist laws, was arrested, thrown into Mauthausen Concentra- 
tion Camp and perished there in 1944. The fact that his uncle was 
Minister at that time did not help — on the contrary. At that time 
I was looked upon with suspicion by the Party and the Gestapo. 

Our marriage, though a successful one, was not without its 
disagreements, though at first they did not unduly affect us. 
Luise had inherited from her father that narrow Prussian outlook 
which can sometimes develop into bigotry. I myself, however, had 
been brought up to proceed on more diplomatic lines and to show 
consideration for olher people — so long as questions of principle 
were not involved. 

None of this need have disturbed our pleasant family relation- 
ship had politics not intervened. Already my very right-wing 
radical wife had reproached me when I subscribed the fost draft 
of the Young Plan. Later, when Hitler came into power, she was one 
of his most whole-hearted and devoted adherents. From the very 
first I had followed his movements with a keenly critical eye ; but 
she refused to hear a word against him. Matters eventually reached 
the stage when she would pass on, in Berlin society, any disparaging 
remarks I had made at home. Even when I pointed out that by so 
doing she was endangering my life she did not cease. Finally I took 
the decisive step and obtained- a judicial separation. 

That was in 1938, when I was already looked upon as a suspect 
by the Party on account of my antagonistic pronouncements. 
Throughout those months I acted as leader of the coup d’etat 
which was frustrated by the Munich Conference. I plotted with 
Generals von Witzleben and Haider in an attempt, by a bold 
stroke, to thwart the Government’s disastrous policy. During 
that period it -was necessary to weigh every word. Any careless 
statement by my wife could have sent me to the gallows. 



As German ^UgresaUatm at the Yom^ Confereitce in Path, ipap 








My Family 12 1 

Thus I lived apart from my wife during the last years of our 
marriage, although we often met and talked. Then she became 
seriously ill. I went to see her a week before she died and had an 
affectionate talk with her. That was during the war. The doctors 
didn’t know what was wrong; she was in a hospital in South 
Germany and seemed fairly comfortable. I had hardly returned to 
Berlin when I received a telegram telling me of her death. We had 
been married thirty-seven years. 

Each of my two children of this first marriage followed a dif- 
ferent path. Inge went to a girls* school and after passing her 
leaving examination proceeded to college, studied political economy 
in Heidelberg and during her student days drove a small car I had 
given her. She was a typical Schacht — ^the name, be it known, 
comes from the Plattdeutsch dialect word “Schaft”, implying that 
those who bear it are tall and slender. At twenty-six she married 
Dr. Hilger von Scherpenberg of the Foreign Office, who today is a 
permanent secretary in the Federal Government. 

My son Jena, seven years younger than Inge, took his leaving 
examination from the Arndt Gra mm ar School at Dahlem and 
spent a few terms at the university, but switched over to a business 
career. He had two years to begin with in the banking firm of 
Mendelssohn & Co. in Berlin, then a year in the States with the 
First National Bank of Chicago, then with the Flicic Combine and 
subsequently with the Gutehofcungshiitte Combine. 

In the war he served as an officer. During the last few days 
prior to the capitulation he was on short leave. Some older friends 
who foresaw the inevitable end tried to keep him in Berlin, but his 
sense of responsibility and esprit de corps would not allow him to 
do so. He returned to his company and was taken prisoner with his 
men. Brother officers of his who eventually came back reported that 
Jens would share the microscopic extra rations which came to him 
as an officer with the men of lus company, pushing them through 
the barbed wire. When the Russians took prisoners from the 
camps and drove them on the long forced march to the East he 
must have perished from exhaustion. I never heard of him again. 
He was quiet, reserved, very clever, and would have made an 
outstanding economist. 

The family life of a public man should not, in itself, have any- 
thing to do with his memoirs. Discrepancies will always arise 
between what is described as simple domestic happiness and higher 
duties in the life of any man who, above and beyond the confines 
of his family circle, is concerned with the welfare of an entire 
country, 
s 



122 


My First Seventy-Six Years 

It was only under the emperors that Romans, to whom public 
life meant everything and the family very little, began to scrutinize 
the family circumstances of their statesmen — and the period of 
decadence had already set in. 

Proof that during the early years of my married life my thoughts 
extended beyond the office of a bank manager was furnished many 
years later by a friend. He recalled that one day we had been 
discussing our future and I had disclosed my aims as follows: 

“I would like to enter public service one of these days — 
provided I were materially entirely independent. I won’t be 
one of those officials who are for ever oppressed by the knowledge 
that their business existence depends on their strict obedience to 
the orders of their superiors. As an official I want to be able at any 
time to retire again into private life should I become involved in 
questions of conscience in the course of my duties.” 

This conversation took place during a trip to Turkey on one of 
those marvellous Oriental nights, when one’s surroundings are 
unfortunately alive with vermin. All my life I have had a horror of 
every kind of bloodsucker. In the Caucasus, on the Black Sea, in 
Turkey — ^no matter where — I preferred to sleep on deck or under 
a tree, even on the coldest nights, rather than share my sleeping 
quarters with lice and fleas, (And one of the worst torments of the 
concentration camp were the bugs which I found every night in 
my cell.) Recalling these impressions had driven the conversation 
with my friend clean out of my head. But I am quite prepared to 
believe that I did say something of the sort. Material dependence 
implies intellectual servitude. A man who merely obeys orders loses 
his pleasure in independent work, his creative ability, his zest, his 
best qualities. 

I have often been accused of ambition, as though that were a 
fault. I have always had a great ambition to do something worth 
while, not for my own personal advantage, but above all for the 
common weal. I have never made any secret of it; indeed, it must 
have been noticeable at an early stage, for in my leaving report at 
my grammar school was written: “Feels he is called to higher 
things.” And it U true that in pursuit of these "higher tffings” 
family and friends always come off badly. 



CHAPTER FIFTEEN 


Germany's Turning-Point 

H ere are a few pleasant recollections of the last years of 
peace. One of them is the trip in the cruiser Magdeburg in 
1913 at the invitation of the Admiralty. I had written an 
article in honour of the Emperor Wilhelm II’s Silver Jubilee for 
Admiral Lohlein, which was published in the Marine-Rundschau. 
The invitation was his way of saying thank-you. 

My Baltic cruise lasted a week. The memory of it is saddened by 
the fact that the Magdeburg and her hospitable Commander were 
sunk shortly after the outbreak of war. 

During this trip something happened which I have never again 
experienced : I was seasick. Not, I must admit, on board the cruiser 
but in a little torpedo-boat on a choppy sea. 

Towards midday the Captain invited me to lunch in his tiny 
cabin, next to the caboose. The meal began when a cook staggeredin 
with a plate of soup which he upset over my suit. Profuse apologies 
and embarrassment. Then we waited for the next course. It never 
came. At last the captain lost patience and demanded to know what 
had happened. The cook’s voice sounded through the serving- 
hatch : ‘ ‘ That’s the third omelette that has fallen into the fire, sir,” 
An awkward situation. But what could the Lieutenant-Com- 
mander do against a rough sea? Our omelettes landed regularly 
among the coals instead of on our plates. 

‘ * Can I offer you some cheese ? ” said the Commander pleasantly. 
I had already been half an hour in the tiny stuffy cabin. Some- 
times the port wall was above my head, sometimes I lay on my 
back gazing at the starboard wall. Now, when the Commander 
said "cheese” my stomach suddenly rebelled. Instead of replying 
I pressed my hand to my mouth, staggered up the few iron rungs 
of the companion-ladder and, once on deck, held tight to the rail- 
ing and leaned over the side. Fortunately I had fetched up on the 
lee side. There was no more talk of lunch on board His Imperial 
Majesty’s torpedo-boat. 

Another pleasant memory is of the visit of a group of forty 
distinguished Turks whom I shepherded on a tour through 
Germany. Thereby hangs a tale. 



j24 Seventy-Six Years 

Following my trip to Turkey which finished up with a bad 
attack of malaria, Jakh, Rohrbach and I had founded a “ German- 
Turkish Society” of which I was Chairman. Its object was to 
establish personal relations between Turkish industrialists, busi- 
nessmen and higher officials and leading German economists and 
interesting personalities in our cultural life. We actually man- 
aged to invite forty prominent Turks for a four-weeks’ tour through 
Germany. The climax of the trip was a reception at Friedrichs- 
hafen on the shores of Lake Constance where, with the aid of 
public contributions following the air disaster at Echterdingen, 
Count Zeppelin had built the new airship Hama, 

Thanks to seventy-three-year-old Count Zeppelin, the tour 
proved an unforgettable experience for everyone. None of us 
had ever flown before. It is easy to picture the faces of the Turks 
when we suddenly saw Germany from above. 

The world was still in the throes of the controversy as to whether 
aircraft should be "lighter than air” or "heavier than air”. The 
Wright brothers had succeeded, a few years previously, in remain- 
ing in the air for a few hundred yards in their motor-aircraft, 
V^en the Zeppelin was supreme master of the air, motor-aircraft 
were still in a very primitive state. It took World War I to bring 
about a change. All the deeper, therefore, was the impression we 
gained from our flight in the airship Hansa. 

At the luncheon arranged by Count Zeppelin for his guests 
after his successful flight the Turks gave free rein to their enthusi- 
asm. The Count was in the best of spirits and told us a great deal 
about the good and bad luck of his experiences with airships. 
He spoke, too, of the German people’s willing sacrifices, and of 
the national fund which had produced not less than six million 
marks. 

Of all those who contributed to the fund, he said, one small boy 
gave him the greatest pleasure. The youngster sent him three 
marks and wrote that he had received this money for notifying the 
fire brigade in the nick of time and so preventing an outbreak of 
fire by smashing the glass of a fire-alarm. And he added “That’s 
something I’ve wanted to do for a long time!” 

That highly successful tour with our ’Turkish guests had an 
amusing sequel where I was concerned. Kriege, at that time 
Secreta^ of the Turkish Section in the Foreign Office, was instru- 
mental in procuring for me the Order of the Crown, Third Class. 
Such an award, however, could not go through without consent of 
the relevant bureaucrat — ^in this instance the German Minister of 
Commerce. He, for his part, took the view that the award of so 



Germany's Turning-Point 125 

exalted an Order to so young a banker (I was thirty-four at the 
time) was excessive. Kriege stuck to his guns. If it wasn’t to be 
the Order of the Crown, Third Class, then at least it should be the 
Order of the Red Eagle, Fourth Class. But even that seemed to the 
Minister of Commerce too great an honour. He said he was pre- 
pared to award me the Order of the Crown, Fourth Class, instead 
of the Order of the Red Eagle. By this time, however, I was no 
longer interested. I refused the Order point blank and in conse- 
quence have never been the recipient of a Prussian Order, apart 
from the Iron Cross (II). 

By contrast, when in later years I was in a good position, the 
most varied Orders were showered upon me, especially in the case 
of official visits abroad. When I travelled through the Balkans in 
1936 a French journalist declared that my journey was in the 
nature of a commercial “crusade.”* “You are mistaken,” I 
replied, “it is a large-scale Calvary.” 

Most amusing were the highly attractive Chinese orders. 
Carved out of red and green jade they presented a very pleasing 
and artistic appearance. I experienced the same kind of thing with 
the Italians as with the Prussians, On one occasion Ambassador 
Attolico told me that all the German Ministers had now visited 
Italy and there was an earnest desire that I should come to Rome. 
I consented, on condition that I did not receive any order. Attolico 
smilingly intimated that that would be impossible. My Italian 
visit never came off, and I have never been the recipientof an Italian 
order. 

Once only in my life I went hunting for precious stones — ^not 
actually with pick and shovel but by taking a share in an emerald 
mine in South America. It happened in this way: In 1913 I 
received a visit from one of the partners in a firm of jewellers at 
Idar-Oberstein, whose brother-in-law was a frienj^of mine, tie 
told me that he owned the concession for the reopening of the El 
Chivor emerald mine in Colombia which for years had been lying 
idle. He himself, he said, had found magnificent emeralds there, 
in no way inferior to those from El Muzo. Would I be interested 
in the reopening of the mine? The stones he showed me were 
certainly very fine . Since my visitor was known to me as an honour- 
able and trustworthy person I managed to interest one or two of 

* The correct translation of the German word Kreuazug, the only 
sense in which it is generally used, is “Crusade”. Its literal meaning, 
however, is a “procession of crosses”,' and it is in this sense that the 
author uses it as a play on the word “cross”, referring to the many 
Orders bestowed upon him. 



126 Seventy-Six Years 

my acquaintances. Between us we raised the necessary capital for 
the prospector’s expedition. 

We persuaded Privy Councillor Scheibe,the famous chief miner- 
alogist of the Berlin Geological Institute, to go out to Colombia 
as our expert. His reports were not unfavourable. We were feel- 
ing very hopeful when the First World War intervened; and there 
was our professor-and-privy councillor stuck fast in Colombia. 
Further financing by means of foreign exchange became impossible. 
A North American syndicate acquired our concession. 

We consoled ourselves at the time for the loss of the emeralds by 
recalling the legend connected with El Chivor, 

Three hundred years previously a Spanish adventurer had 
arrived in Colombia. His journeyings hither and thither all over 
the country brought him to El Chivor, a little Indian village in the 
middle of virgin forest. There he noticed that on feast-days the 
villagers adorned themselves with exquisite emeralds. The source of 
the stones was carefully withheld from him, so he proceeded to 
make advances to the Chief’s daughter, winning her confidence 
with promises of marriage — and she let him into the secret. The 
Spaniard dug up quantities of stones and took them to Bogotk, the 
capital, where he amassed a huge fortune, married into one of 
the wealthy families and calmly jilted the Indian girl. Retribution 
was not long in coming. On a certain occasion when he came down 
fromBogotk to El Chivor for some more emeralds he found that the 
Indians had diverted the course of a mountain torrent that flowed 
near the shaft, and the stream had buried the mine deep under 
masses of rock and tree trunks from the virgin forest. The Indian 
girl, however, laid a curse on him: “ Cursed by thy wealth. Cursed 
be thou, thyself. Cursed be the emeralds of El Chivor. They shall 
lose their colour and sparkle and he who weareth one of these gems 
shall curse thee, as I curse thee.” 

When the Spaniard returned to Bogoti where he had sold many 
of the emeralds it transpired that these stones did not keep their 
colour or their sparkle. He was exposed as a fraud, driven out of the 
community and perished miserably. 

I am quite ready to believe that the above is only a fairy-tale to 
explain why the mine was once again abandoned after it had been 
wor^g. At any rate the little emerald I possess as a memento of 
my jewel-mine has retained its old sparkle and colour to this day. 

The loss of El Chivor is a mere fraction of Germany’s losses in 
foreign securities during World War I. This is brought home 
to me more and more clearly whenever I have occasion to dip into 
a little booklet that I wrote at that time. The year in which the 
Emperor Wilhelm II celebrated his Silver Jubilee was also a 



Germany's Tumir^-Point 

memorable one for the Dresdner Bank — ^now established forty 
years, during which time it had risen to be the third of Germany’s 
principal banks. It was in honour of this fortieth anniversary 
that I wrote the above-mentioned booklet, entitled “Germany’s 
Economic Resources” {Die Wirtschaftlichen Krdfte Deutschlands), 
describing the rise both of my banking firm and of my country. 

The work summed up the results of the past forty years. The 
figures speak for themselves: my merit consisted in having 
assembled them in reasonable sequence. Whoever read them would 
obtain a clear picture of the growth of German economy under the 
Empire. From the continental, intensely agricultural Germany of 
forty years previously had evolved an industrial and commercial 
State which was beginning to spread its feelers all over the world. 

An essential feature of this process had been the rapid accumula- 
tion of capital in Germany which had enabled our country to 
reach out far beyond her own borders and to participate in the 
economic development of other countries and continents, German 
banks had made timely loans to big North American firms and by 
the purchase of shares and issues of bonds had acquired an interest 
in North American Railways. 

Another successful German financial activity was the big 
cable companies which laid telegraphic cables between North 
America and Europe. German shipping had created a fleet of the 
most modern type of merchant vessels, not only tramp steamers 
but regular liner services to America, Africa and Asia. 

In proportion as our international trade relations developed, 
branch establishments of affiliated companies and German banks 
sprang up abroad. The Dresdner Ba^ founded the Deutsche 
Orient-Bank with establishments in Constantinople, Cairo and 
elsewhere, and the Deutsch-Stidamerikanische Bank with branches 
in the Argentine, Brazil and Chile. Earlier still the Deutsche Bank 
had founded the Deutsch-tJberseeische Bank. Domestic develop- 
ments likewise showed how greatly the structure of our life had 
changed. Between 1870 and 1910 the population of Germany had 
risen from forty to a full sixty million, an increase of exactly 52 
per cent. Comparative figureg show that the British increase in 
population during the same period was 37 per cent., the Fren^ 
only 8 per cent. In 191 1 the National Debts of these three countries 
stood as follows : Germany^ — 317 gold marks per head. England — 
330 gold marks. France-^66 gold marks — the last two trans- 
lated from their respective currencies. 

For military purposes the contribution per head of population 
in 1912 was: Germany — 21 marks. England — 32 marks. France — 
27 marks. 



128 


My First Seventy-Six Years 

Wages at Krupps’ had risen by nearly loo per cent, since 1880. 
Sugar consumption (always a sign of general prosperity) had 
increased by 300 per cent.; cotton had doubled. 

Thanks to the chemical industry German agriculture too had 
been able to increase output enormously. In 1912 the harvest in 
Germany was 21 Doppehmtner per hectare as against 14 Doppel- 
zentner in France and Austria-Hungary. 

German coal output had increased sevenfold in the past four 
decades. 

As a market for foreign goods Germany played a considerable 
part. She absorbed a larger proportion of British exports than 
either France or the U.S.A. In 1910 the international port of 
Hamburg was second only to New York in respect of tonnage. 

The emigration figures were particularly impressive. My father 
had left Germany for the United States in 1870. The German 
emigration curve showed that in so doing he had merely followed 
the trend of the times. The peak year for German emigration was 
1854, when a quarter of a million Germans left the country. After 
that the number temporarily declined, but rose again in the ‘sixties 
and reached a new peak in 1870 with more than a hundred and 
twenty thousand emigrants. Following the German victory in the 
Franco-German War there was a sharp downward curve which 
touched bottom in 1876-^7 with only twenty thousand emigrants. 
Because of these favourable business conditions at home my father 
quitted the United States and returned to Germany, Immediately 
after his return, however, the situation deteriorated and in 1880 
the emigration figures again totalled a quarter of a million a year. 
These were the lean years in our family — Heide, Husum, Ham- 
burg — which I remembered from childhood. After that the num- 
bers steadily declined, to rise again for a brief interval in 1890 — 
presumably as a result of the agricultural crisis — and then dropped 
to a minimum. It is unlikely that more than twenty to twenty-five 
thousand Germans left their homes each year between 1895 and 

1915* 

It was due to the industrialization of Germany and the policy 
of long-term trade agreements that the emigration fever abated 
after 1890, On the other hand, a new problem arose, namely, that 
Germany's steady advance in the world’s markets aroused the 
antagonism of those older industrial countries who were the first 
in the field and felt that their chances in the market were being 
threatened. That applied first and foremost to England. 

Confronted with this new danger there was one chance 
of compromise, namely, to engage in colonial activities. Old 
Bismarck can hardly have realized that it was a turning-point in 



Germany’s Turning-point lag 

German destiny when the increasing population made industrial 
development inevitable. His whole policy was too deeply rooted 
in the days when the countries of Europe were not yet faced with 
problems of food production. This must assuredly have been the 
reason why Bismarck, very late and very hestitantly, gave his 
support to Germany’s first attempts at colonial activity. As a 
result, Germany’s colonial administration has never managed to 
provide a remedy for the problems automatically created by 
Germany’s industrial progress. 

The former conception of colonial policy is nowadays completely 
discredited, and rightly so. Precisely on that account it is all the 
more essential, I feel, to emphasize the fact that Germany’s 
colonial administration has never been directed towards any 
imperialistic goal. The German colonial force, which existed for 
the purpose of maintaining order, never exceeded a total of six 
thousand men in all the German colonies together. In neither of 
the two European Wars were natives of the German colonies 
employed in battle, whereas native divisions from North Africa 
and India fought in large numbers with the Allies in Europe. 
German administrative and economic achievements in our 
colonies have been the subject of the highest praise by foreign 
connoisseurs. Even after Germany’s defeat in two World Wars her 
reputation has been preserved among the natives, despite the fact 
that these colonies had only been in German possession for twenty- 
five years. 

Nowadays I learn more than I formerly did from the booklet 
I wrote for the Dresdner Bank’s celebrations. Within two decades 
the European situation had radically altered. Politically and 
economically Germany had become a Great Power; England had 
emerged from her “splendid isolation” of Victorian days and was 
engaged in creating a strong network of alliances and agreements, 
directed against Germany. French loans amounting to mil- 
liards contributed to the Tsar’s military preparations in Russia. 
Bismarck’s S3rstem of treaties had once meant that Germany was 
secure against all surprises. Now, however, she had fallen into an 
“isolation” which was anything but “splendid”. 

It is not my business in this book to describe how this isolation 
was achieved. At that time I was firmly convinced that there would 
never be war. 



CHAPTER SIXTEEN 


The First World War 

T he outbreak of war came as a surprise to me as it did to all 
Germans. Right up to the eleventh hour every reasonable 
person still believed that the Sarajevo incident would 
remain a localized affair. Anyone who has read the Memoirs of Sir 
George Buchanan, British Ambassador in St. Petersburg in 1914, 
will gather from them that war could have been avoided, even at 
the last moment, if interested parties had not added fuel to the fire. 
Only when columns of soldiers came marching down the street, 
accompanied by cheering and weeping crowds, when the first 
tidings of disaster reached us from East Prussia and premature news 
of victory from the West, were we compelled to realize that a war 
of continental proportions had broken out. What Bismarck had 
always tried to prevent had come to pass — Germany was fighting 
on two fronts. 

1 had no conception of what such a war would be like. Since the 
day when a military Surgeon-Major had vetted me and rejected 
me as unfit for service on account of “acute myopia”, I had taken 
no further interest in military doings. My knowledge of warfare 
was limited to the few descriptions of the campaign of 1870 that I 
had read as a boy, and to Uncle Wieding’s portrayal of the Battle of 
Idstedt. And that, as everyone knows, was in 1850. 

Moreover, there were two institutions of which, all my life, I 
stood in considerable awe; one was the Military, the other was 
Officialdom. A captain or a government official to me represented 
huge beasts who, in some incomprehensible fashion, contrived to 
make life difficult for civilians. 

During the first weeks after the declaration of war it was not 
possible to determine any economic changes. Financial policy 
adapted itself easily and smoothly to war conditions. Not until the 
first year was well under way did more serious problems arise. 
That was the beginning of never-ending anxieties over raw mater- 
ials and food supplies ; and the steadily rising financial demands of 
the national economy, which had had to switch over completely 
to war requirements, gave us bankers many a headache. 

Walter Rathenau, later Foreign Minister, was the first to raise 
the question of raw material supplies. Only then was the official 



The First World War 


13* 

machinery for the procuring and allocation of raw materials and 
food supplies set in motion. The dreadful word “control”, so 
closely related to “bondage”, was to become a permanent addition 
to our dictionaries. From 1914 onwards new controls were con- 
stantly being imposed — gold, foreign exchange, metals, sugar, 
rubber — anything. 

Moreover it was not more than two months before the war 
had me in its clutches. In October 1914 I was asked whether I 
would be prepared to take over the duties of banking administra- 
tion in occupied Belgium. Of course I accepted, and was there- 
fore installed as Administrator of the Bank in Belgian occupied 
territory. 

I remained there in this capacity from October 1914 to July 
1915. Unfortunately I had never mastered the fundamental prin- 
ciple of the Army, i.e. never, under any circumstances, to attract 
attention. I attracted the attention of my superiors in Belgium on 
account of one or two unusual ideas which were to give me a lot of 
bother and unpleasantness. 

One of the problems of the occupation was how to induce the 
Belgians to remit the occupation costs in cash. During the first 
months the military simply commandeered whatever they wanted,, 
which gave rise to difficulties for the occupying forces as well as 
for the population. It was essential to replace this irregular pro- 
cedure by something different. Major von Lumm, the head of the 
finance department and a member of the board of directors of the 
Reichsbank, had had the bright idea of replacing the existing 
Belgian coinage by a new currency. I considered this unnecessary, 
but could do nothing to prevent it. It now fell to my lot to organize 
the payment of occupation costs by means of negotiations with 
the Belgian Soci6t6 G^n&ale. I succeeded in making the Belgian 
officials understand the advantages of cash payments over hap- 
hazard requisitioning. Above all, I pointed out, it would be 
possible to maintain the country’s trade on an orderly basis if all 
goods were paid for in cash. 

The Belgians objected first and foremost on grounds of foreign 
policy. Their Government had emigrated to London. Consequenuy 
the Belgian State, as such, could not be involved. I suggested 
instead by way of solution that the nine Belgian provinces should 
issue a loan exceeding the amount of the occupation costs. The 
proceeds of this loan should realize a stun sufficient to cover these 
costs. My suggestion was eventually accepted after a good deal of 
discussion — I assume with the tacit consent of the Belgian Govern- 
ment in London, for despite all military precautions there was 



132 My First Seventy-^Six Years 

constant underground communication between the Belgian repre- 
sentatives in Brussels and the Government in London. 

The next step was to induce the German military authorities 
to agree to this plan. Of course commandeering, pure and simple, 
suited the military far better than proper methods of payment. 
In this respect I don’t think there is anything to choose between the 
soldiers of one army and another. Requisitioning can never be so 
strictly controlled as payments from fixed capital. 

Major von Lumm, therefore — very smart in his uniform of the 
Munich Life Guards — ^took me along to a meeting of the military 
authorities where I felt rather out of it as the only civilian in mufti. 
The rest were covered in gold braid and devastatingly impressive. 
Herr von Lumm left it to me to introduce my plan and defend 
it when it came under discussion. 

Then the nine provincial Governors had to append their signa- 
tures to the agreement. In this connection some final difficulties 
arose. These men were fully aware of the heavy responsibility they 
were assuming vis-d-vis their people and their Government when 
they consented to sign. I had fixed the monthly payments at forty 
million francs. At the last minute one or two of the Governors 
tried to persuade me to reduce this amount to thirty-five million 
francs. The negotiations threatened to break down. I could under- 
stand the Belgians — ^they wanted to get as much as they could out 
of the deal — ^perhaps they were even anxious to provide against 
the contingency that the Germans might one day depart, and be 
able to prove that they had saved their country sixty million 
francs a year. But I wasn’t able to let them off. I asked Herr von 
Sandt, the chairman of the dvil authorities, to give me a little 
time, and explained to the Belgians that if my suggestions were not 
accepted I should turn any further procedure over to the military. 
That did the trick. We obtained the Belgians’ signatures to a docu- 
ment guaranteeing payment of occupation costs amounting to over 
four hundred and eighty million francs for the first year of the war. 

In the subsequent years of the occupation, after I left Belgium, 
it was no longer possible to obtain the signatures of the Belgian 
Governors to further bonds, which, on the contrary, were signed by 
German provincial administrators in Belgium. 

In the beginning the Governor-General of occupied Belgium 
was von der Goltz-Pasha — ^Field-Marshal General Colmar von 
der Goltz, who had been awarded the rank of Pasha for his many 
years’ service as organizer of the Turkish Army. He was typical of 
tile Prussian officer of the old school — of great personal courage, 
intensely honourable, very human though somewhat reserved. 



The First World War 


133 

correct, and with a great sense of duty. In addition he had an 
exceptionally good brain. I had known him since 1911 when I was 
Chairman of the German-Turkish Association and we had taken 
those forty distinguished visitors from the Land of the Crescent on 
a tour through Germany. 

I didn’t see why I, as a civilian, should be deprived of the privi- 
lege of frequenting the officers’ club which had been established in 
the Brussels Casino. I quickly had it rubbed into me that this was a 
typical civilian notion and that the staff officers clung tenaciously 
to their exclusiveness, especially when stationed at base. 

“Impossible!” said Major von Lumm when I told him I 
intended to feed at the officers’ club. “It would be necessary to 
obtain the Governor-General’s permission.” 

“Right!” I said, “then let’s ask him!” 

“Out of the question!” von Linrnn protested. “What are you 
thinking of? We cannot trouble the Governor-General with a 
request of that kind. Perhaps we might consult Herr von der 
Lancken, the head of the appropriate department of the Foreign 
Office.” 

We duly consulted Herr von der Lancken who likewise raised 
considerable objections to a civilian frequenting the German 
officers’ club in Brussels. Von der Lancken also was of the opinion 
that so important a personage as His Excellency, Field-Marshal 
General von der Goltz-Pasha, Governor-General of occupied 
Belgium, must certainly not be bothered with the request of an 
ordinary man with no title higher than that of Doctor. I began to 
grow impatient. 

“Gentlemen,” I said, “since you both have such objections you 
will perhaps allow me to approach von der Goltz direct.” 

“But — ^will the Governor-General receive you?” they asked, 
as with one voice. 

“My dear sirs, I know von der Goltz very well, but I didn’t 
want to go over your heads.” 

As I expected, Goltz received me very cordially. Before I could 
get out a word about my request he said : “You’ll dine with me this 
evening at the Casino, of course?” I turned up on the dot. To the 
great astonishment of my superior and some fifty other officers, 
Goltz put me on his right and engaged me in lively talk. 

In the course of conversation he asked me about a little adven- 
ture I had had when I arrived in Belgium. He already had the 
official version, but wanted me to give him further details. So I 
told him the story. 

Before I left for Brussels, secretary Lewald of the Ministry for 
Home Affairs called me up and asked me if I would look a^r a 



j24 My First Seventy- Six Years 

lady during the journey. She was going to Brussels to inspect a 
house that belonged to her. Lewald had described her over the 
phone as a charming person (he was luiown as somewhat of a 
ladies’ man)— a certain Princess X, with the grand style of a real 
society lady. If now and then some quiet gambling went on in her 
house — well she looked the other way. 

I looked after the Princess on the journey to Belgium, but kept 
my distance— she was a bit too much made-up for my taste. 
Moreover, since she tended to be rather too forthcoming I put up 
at another hotel in Brussels and tlienceforth only ran across her 
once or twice in the anterooms of various Government offices. 
She really was a woman of great charm and elegance. Small wonder, 
then, that all the men she had to do with fell for her. In addition, 
she had a letter of introduction to the Governor-General from old 
Frau Krupp so that she obtained permission without any diffi- 
culty to take little gift packages to the troops who were besieging 
Antwerp. 

I was flabbergasted when, on the evening of the second day, a 
German police officer in mufti came to the hotel where I happened 
to be sitting with an Austrian friend — a member of the bank’s 
board of directors — and asked if I could speak to him privately 
for a minute. I followed him into the corridor. The police officer 
enquired whether I knew Princess X and who the visitor was in my 
room. 

“I accompanied the Princess on the journey to Brussels at the 
request of a member of the Ministry for Home Affiairs. The 
gentleman in my room is an Austrian and works in the same depart- 
ment of the bank as I do.” 

“Then I regret. Doctor Schacht, that I am obliged to arrest you. 
Please come with me.” 

I followed him without further ado and was ushered into the 
presence of a lieutenant of the German Command who awaited 
us in the Princess’s hotel. Of course I was able in a few words to 
establish my identity. The lieutenant apologized. It was obviously 
a case of mistaken identity. 

I was curious. “For whom did you mistake us — ^my friend and 
I?” I asked. 

The lieutenant then told us the story of Princess X. This charm- 
ing and fashionable lady of the upper ten was the daughter of a 
petty municipal offidal somewhere in the Rhineland. Her unusual 
beauty had enabled her to form a liaison with an officer of princely 
rank who had strayed slightly from the path of virtue. The prince 
had married her and had had to leave the service, but had been 
reinstated following the outbreak of war. 



The First World War 


135 

The German military police had informed Brussels, somewhat 
late in the day, that Princess X was a member of a theatrical com- 
pany which had already made the acquaintance of German courts 
of law. Espionage was suspected, since the Princess for no apparent 
reason had collected field-post letters from the troops at Antwerp 
with the intention of taking them back with her to Germany. Not 
only was this forbidden but it somehow didn’t tally with the character 
of this particular Princess. Actresses are not usually so interested 
in the needs and anxieties of the lower classes. The Princess had 
frequently been seen in the company of two men (so ran the Berlin 
report) : one of them tall and fair, the other an Austrian. 

Now of course we saw daylight. I had accompanied the Princess, 
I was tall and fair, and in my hotel room was my Austrian friend 
from the Bank. 

When we had had a good laugh over this mix-up the lieutenant 
asked me to assist him unobtrusively in arresting the Princess. 
At his request I called on the lady the following morning and 
had lunch with her in the hotel dining-room. During lunch the 
lieutenant happened to come up to our table and I presented him 
to the Princess. He sat down; I made myself scarce at the first 
opportunity and left the Princess with him. 

“Damfool business! A bit careless — our good Lewald,” said 
Goltz. “Oh well, it worked out all right.” 

Life in Belgium would in the long run have been very boring 
and depressing had it not been for Ulrich Rauscher, a fresh lively 
Wurttemberger from the Foreign Office. He was free-and-easy 
and witty, an excellent companion. Many years later he was 
appointed German Ambassador in Warsaw, We went about a lot 
together. Unfortunately Rauscher was a bit too fond of his liquor 
which sometimes proved too strong for his resolution; he was apt 
to become garrulous when he had “the drink taken”. 

We were both inclined to be somewhat censorious. But when 
Rauscher had had one over the eight he really did overstep the 
limit. There was a winter’s night when I had taken him home — 
not for the first time. Next morning he must have had an attack 
of consciehce, for he sent me the foUowing verse, by hand : 

“There comes a point when drinking breeds 
A Tippler,* fuddled fore and aft. 

Then for his overflow he needs 
A deep, discreet, and lengthy Shaft.”* 

• Word play on both their names. Rauscher — ^Tippler, boozer, from 
"e/neM Rausch haben” to be tipsy, tight. Schacht — a shaft (long, deep , 
openipg). 



136 My First Seomty-Six Years 

I seized a pencil and, while the messenger waited, wrote on the 
other side of the sheet: 

“If you feel that drinking’s great, 

Drink until you can’t see straight. 

For to me you’ll always matter, 

(I’m “lengthy”, “deep”, and never chatter). 

But, when in your senses fully, 

Speech and mind no longer woolly. 

Give me just a hearty grip 
Of your paw in comradeship.” 

Rauscher was a writer with a remarkable sense of style. His 
experiences in Brussels during the Occupation period were later 
published in book form under the title Belgium Yesterday, Today 
and Tomorrow. He sent me a copy with the following inscription: 

“We’ve been through this together, lad. 

What with old Lumm and Lancken. 

Who sticks that job may well be glad 
Of his daily forty franken. 

He’ll sweat himself to death an’ all 
To do the work he’s hot on; 

He’s lucky who can still recall 
What we’ve long since forgotten.” 

During the first months of the war in occupied Brussels several 
professional colleagues forgathered from Berlin and Frankfurt in 
the banking department of the Military Government. Paul von 
Schwabach was there, Ernst von Mendelssohn-Bartholdy, Hans 
Furstenberg, Willy Dreyfuss, young Weinschenk, and many 
others. One day the son of dhe Hamburg Banidng firm of 
Behrens Sons turned up unannounced at von Lumm’s. The 
conversation, at which I was present, was characteristic. 

“What are you doing here in Belgium, Herr Behrens?” en- 
quired von Lumm, stiffly and stand-offishly. 

“I wanted to offer you my services, sir.” 

Lumm was not enthusiastic. “I am not in need of your services. 
We are overstaffed in any case. Incidentally, how did you come 
here?” . 

“In my car.” 

Von Lumm displayed signs of interest. “You have a car?” 

“Yes, sir, a Roffs-Royce." 

Lumm opened his eyes. “Rolls-Royce ? Very well, you can stop, 
but the Rolls-Royce must be at my disposal.” 

“With pleasure, sir.” 



The First World War 


137 

Lumm had a knack of exploiting his colleagues, but they got 
their own back. When the war was over and we quitted Belgium, 
one after another disappeared secretly in his car without notifying 
his Chief. Eventually Herr von Lumm had to make the homeward 
journey in a third-class compartment packed like a sardine tin. 

When I was there he was at the height of his power. Since he 
was not possessed of much business sense it so happened that, as 
time went on, my own work and that of my Austrian friend 
Somary became more and more conspicuous. That annoyed him 
for he couldn’t bear anyone else to be noticed. One day he told me 
quite frankly that he intended to fire Somary. 

For a moment I was thunderstruck at such treachery. But after 
I had slept on it I went to Herr von Lumm and told him that under 
these circumstances I no longer entertained that confidence in 
him which was indispensable to successful co-operation, and wished 
to resign my post. He could not very well refuse. But the look he 
gave me boded no good. I should have realized that he was not the 
man to take a rebuff lying down. 

With the introduction of the new bank-notes (von Lumm’s 
idea) the burden of their distribution (i.e. their exchange for 
German marks) fell on the nailitary commissariat. The Deutsche 
Bank had a branch in Brussels and applied for a very considerable 
delivery of these notes, which came in very handy in their dealings 
with their Belgian customers. Whereupon the Dresdner Ba^ 
asked me to procure a supply of Belgian notes for them so that they 
might not be behind when doing business with their customers. 
I submitted this request in person to the chief of the commissariat 
who agreed without further ado. 

All this had happened in February 1915 and Lumm, of course, 
knew about it. Now, in July, he suddenly brought the matter up 
again. It was, he said, an improper action on my part to represent 
tlie interests of the bank that had sent me to Belgium. I replied 
that if I had been guilty of improper action I would request that a 
disciplinary enquiry be instituted against me. That, unfortunately, 
was not possible, retorted Herr von Lumm with a spiteful smile, as 
I had resigned two days previously. 

I applied to the Imperial Ministry for Home Affairs and 
requested that the matter be investigated. The result was a 
pronouncement that no blame whatever attached to me. 

I mention this insignificant occurrence because it was later 
brought up against me. When, in 1923, I was about to take up a 
Government post my opponents sought to discredit me politically 
by spreading a rumour that I had been guilty of “sharp practices ” 
in Belgium. Whereupon Stresemann, who at that time was Chan- 



138 My First Seventy- Six Years 

cellor, instituted a fresh enquiry into the case from the documents 
in the possession of the Ministry for Home Affairs and also con- 
tacted the remaining living witnesses. The result of this second 
enquiry tallied with that of the first. Stresemann conveyed the 
information to me in a very kind letter. 

At the time of this intrigue Field-Marshal General von der 
Goltz was no longer in Belgium. He had applied for a command in 
Turkey. In 1915 he succeeded in bottling up the British under 
Townsend in Kut-el-Amara. He died of typhus in Baghdad on the 
19th April 1916. 

Von der Goltz was typical of the non-conforming element on 
the German General Staff, a man widely read and of many and 
varied interests. He was a combination of military expert, com- 
manding officer and strategist. His individual and obstinate out- 
look not infrequently brought him into conflict with his superiors ; 
on one occasion he was even temporarily placed on the retired 
list on account of his book Leon Gambetta and his Armies which 
quite openly touched the weaknesses of the General Staff on the 
raw. His rather heavy face with the short moustache, the mouth 
with its drawn-down corners, the wise eyes behind spectacles, have 
all remained in my memory. 

My brother Eddy, who served as Surgeon-Major in Turkey 
under Goltz Pasha, had the sad task of embalming the Field- 
Marshal’s body for the last journey home. The wheel of life some- 
times has queer ways of coming fiill circle. 



CHAPTER SEVENTEEN 


Director of the Bank 

M y activities were not affected by Herr von Lumm’s 
intrigue in Brussels. Immediately after my return to 
Berlin I resumed my work in the Dresdner Bank. My 
old chief, Eugen Gutmann, intimated that I would be appointed a 
regular member of the board at the earliest opportunity. That I 
had done some successful work as Deputy Manager in occupied 
Belgium had doubtless more than a little to do with it. 

At home I found my wife and the two children in none too easy 
circumstances. Food had grown scarcer. Milk for children was 
unobtainable. So I did what hundreds of thousands of Berlin 
working-class families had done earlier. I started a vegetable 
garden and acquired a nanny-goat which my twelve-year-old 
daughter had to learn to milk. Of course there were other ways of 
adding to the scanty food supplies, but they were less commendable. 
The usual “wangling” was not in my line. I had to submit to 
cultural and mental interests being crowded out by the material 
difficulties of wartime housekeeping. 

Towards the end of the year — since my promised appointment 
to the board appeared to be held up — enquired how matters stood 
and Gutmaim rather hesitatingly disclosed that his son Herbert, 
who was a member of the board, had opposed my nomination. 

“The best thing you can do,” he said, “is to We it out with 
Herbert.” Which, of course, I did without delay. Herbert Gut- 
mann was naive enough to give me the reason for his opposition. 

“If you come on the board. Doctor Schacht, I am afraid you mil 
very soon take all the syndicate business away from me.” 

By S3mdicate business is meant the collective activities of several 
big banks which as a rule are too extensive for any one bank to 
tackle alone, or which concern clients who deal with more than one 
bank. 

My answer to Herbert Gutmann was short and to the point. 
I laughed. 

“If you’re scared, my dear Herbert, I’ll clear out.” 

That same day I told the board that I intended to leave the 
Dresdner Bank. There was a certain jarring atmosphere towards 
the end of my time there, which both parties regretted, I had been 



1^0 My First Seventy~Six Years 

with the Dresdner Bank for thirteen years — from 1903 to the end 
of 1915 — and acquired my first knowledge of banldng matters and 
won my first spurs there. I remember these thirteen years as some 
of the most satisfying years of my life and my relations with my old 
colleagues had consistently remained on the best possible footing. 
I was conscious of some satisfaction when someone later told me in 
confidence that Eugen Gutmann in particular had greatly regretted 
my leaving and had subsequently said to his colleagues ; “ You did 
a very stupid thing when you let Schacht go.” 

“What do you think of doing now?” my wife asked. “You 
always burn your bridges without knowing where the new road 
leads.” 

“My dear, the main thing now is not whether one is well or 
badly off from a material standpoint but whether one can preserve 
one’s individuality. I am not in the least anxious about our future; 
but first of all I will go and report to the War Office.” 

Scarcely was I registered with the Wehrkreiskotmmndo (local 
detachment of the Home Guard) when a new call arrived. The 
report of my resignation from the Dresdner Bank had quickly 
spread and Herr Witting, a privy coimcillor and chairman of 
the supervisory board of the Nationalbank fiir Deutschland, ap- 
proached me with the offer of a seat on their board. The National- 
bank was in the second rank of the big banks in Berlin, immediately 
after the so-called D-banks. It had a capital of ninety million 
marks. Like the Berliner HandeUgeselkcJiaft it had no branches; 
against that however it had a joint stock arrangement with the 
other big banks and for this reason was regarded with special 
esteem. After a brief discussion I signed my agreement with the 
bank which, once again, diverted me from military duties, at base 
or with the Army Administration. 

A few days after I had signed on for my new job Karl Friedrich 
von Siemens — ^head of the Siemens combine — asked me to come 
and see him, and offered me the vacant post of financial director. 
This new offer caused me some regret because, had it arrived 
simultaneously with that of the Nationalbank I should probably 
have decided in favour of Siemens. Now, however, I had committed 
myself, and was obliged to decline with thanks. 

The fact that all banking activities were concentrated on the 
support of the war effort meant that our duties were more uniform 
than in peacetime. There were no foreign or big financial trans- 
actions. Even during the war, however, interesting work did crop 
up. In my present position as one of the governors of a bank I 
had occasion to realize how, in every instan ce, personality counts 
for more than capital. 



Director of the Bank 

One day, very soon after I had taken over, a big-business mnn 
of my acquaintance sent in his card in a sealed envelope as he 
wished his visit to be as unobtrusive as possible. He was a customer 
of the Dresdner Bank and had called there on a matter of business. 
When he learnt that I had left he declined to discuss the question 
with anyone else and brought his proposition to me because he 
had had previous experience of my unbiassed attitude and my 
business methods. Personal confidence counted for more with him 
than the mere question of money. 

Very much the same thing happened with Prince Hohenlohe’s 
agent who one day asked for help. Prince Hohenlohe-Ohringen, 
together with Prince Fiirstenberg, had been a member of the so- 
called Princes’ Combine which, in an effort to compete with big 
business in industrial and financial matters had incurred heavy 
losses. Following the winding-up of the combine. Prince Hohen- 
lohe found himself in debt to the Deutsche Bank to the tune of 
some ninety million marks, and he obviously felt that they had not 
treated him properly. He stuck to his determination to sever his 
connection with the Deutsche Bank but he evidently had difficulty 
in finding another bank to undertake his affairs, either because the 
credit commitments were too high or because another bank feared 
that to do so might prejudice dieir relations with the Deutsche 
Bank. I was attracted by the magnitude of the task with its possi- 
bilities of consolidating the Hohenlohe undertaking. With the 
object of sharing the assignment I made certain first of all that the 
Banner Bankverein would co-operate, and in order not to disturb 
our friendly relations with the Deutsche Bank I went to see Mankie- 
witz, the manager in charge of the business. I explained to him 
that the Prince was determined to sever his connection with the 
Deutsche Bank in any case, and that the only way to avoid unpleas- 
antness was for the assignment to be taken over by a bank with 
whom his establishment was on friendly terms. This plain, straight- 
forward statement did not fail to make an impression. The 
Nationalbank undertook the conunission and was able to clear up 
the muddle very quickly during the following months through the 
sale of part of the Prince’s property. 

Yet another instance of an awkward situation being smoothed 
out by frank personal discussion. At that time the Deutsche Bank 
and the Diskontogesellschaft (Discount Company) had a difference 
of opinion as to which of them would be likely to achieve a control- 
ling interest in the Deutsche Etdolgesellschaft (Petroleum Com- 
pany). In this connection the Nationalbank was a member of the 
same conibine to . which the Diskontogessellschaft also belonged 
and, for purposes of voting at the general meeting, always placed . 



i^z My First Seventy-Six Yeears 

any available shares at the latter’s disposal. For some reason 
unknown to me one of my colleagues on the board had promised 
our shares to the Deutsche Bank — a violation of all custom and 
also of our pledge to the Diskontogesellschaft. By means of 
personal discussion and a straightforward exposition of the facts 
I was able to persuade the Deutsche Bank to relinquish the shares 
in question — an action which restored our reputation with the 
Diskontogesellschaft. My colleague, however, was obliged to 
resign from the board of the Nationalbank. 

"W^le I was fully occupied with my sometimes irritating, some- 
times satisfying job, the great tragedy of the war was unfolding at 
the Front. On my way from the banking quarters of Berlin to catch 
my train for home at the Potsdam station I would pass the long 
queues of people in front of the shops with the badly-lit windows, 
catchpenny articles and ersatz goods which now replaced the 
former magnificent displays and excellent quality. Women news- 
vendors cried the latest battles, advances and retreats. Coal 
supplies were becoming increasingly difficult. Shivering men and 
women hurried through the streets; everywhere were people with 
rucksacks and shopping-bags bent on snaffling food supplies in the 
outlying districts. I was reminded of the poverty-ridden years of 
my childhood. I too had known what it was to hurry through the 
streets in order to buy a twopenny bucketful of coal. In those days 
there was plenty of coal but not enough cash. Now it was the other 
way about : money was plentiful, while supplies grew scarcer every 
day. 

The general distress and misery of the war years paved the way 
for a complete reconstruction of Germany’s social system. In vain 
the banks did all they could to maintain the monetary system on 
lines which experience had shown to be commercially sound, decent 
and therefore socially acceptable. The influence of the banks on 
the general economy declined in proportion as war-profiteering 
began to flourish. 

One of Germany’s most far-reaching errors in the First World 
War was her mistaken fiscal policy. She endeavoured to meet the 
colossal costs of the war by an appeal to the self-sacrificing spirit 
of the people. 

“I gave Gold for Iron” was the slogan for the surrender of gold 
ornaments and jewelry. “Invest in War Loan” ran the appeal to 
the patriotic sense of duty of all classes. Issue after issue of war 
loan was offered for subscription and transformed the greater part 
of German private fortunes into paper claims on the State. Our 
enemies, espedally Britain, took another line. They met the cost 
of the war with taxes aimed primarily at those industries and 



Director of the Bank 

groups to whom the war spelled prosperity. Britain’s policy of 
taxation proved socially more equitable than Germany’s policy 
of war loans, which lost their value after the war was over and 
proved a bitter disappointment to the self-sacrificing investors. The 
actual war profiteers however had a free hand. To have friends at 
court among the appropriate military authorities meant, for shrewd 
speculators, an opportunity to get large supply-orders at enormous 
profits. “ Wanglers” on both sides of the German frontiers reaped 
a rich harvest importing low-quality foodstuffs from neutral coun- 
tries. On one occasion during the War, Albert Ballin, Managing 
Director of the Hamburg-Amerika Line, entered the lounge of 
the Hotel d’Angleterre in Copenhagen where a crowd of profit- 
eers were eagerly gesticulating and haggling. He turned to his 
companions and said: “I estimate that that bunch between them 
would be good for thirty years' hard labour.” 

It wasn’t so much the big business firms that went in for profit- 
eering, but predominantly the traders, the new-rich, the grabbers, 
sharks, the something-for-nothing type. Anyone who had proved 
himself capable of building up and maintaining an industry, with 
all its economic fiuctuations, even in peacetime, is less interested 
in colossal wartime profits than the good-for-nothings who imagine 
they can make their pile during the turbulent years of war. 

Among the many serious business-men who gave of their best 
may be cited Albert Ballin. When I went to see him in his Hamburg 
office in 1916 and read the firm’s proud motto. Mein Feld ist die 
Welt (The World is my Field) we were both inclined to wonder 
whether this would live up to its implication. Ballin was confi- 
dent. He relied, as I myself did, on the conomon-sense economic 
outlook which would prevail, even if the war should not end in 
a decisive German victory. 

“You’ll see, Herr Schacht, the business-man's sound judgment 
will win through. The wartime mania for destruction can only be 
combated by general economic co-operation. In wartime feelings 
of hatred and revenge are rampant. But when the ordeal is over 
business-men will once again be able to have their say. Politicians 
can’t be so crazy as to perpetuate the miseries of war.” 

Ballin was mistaken in his belief. The politicians were crazy: 
business-men never had a chance to speak their mind. Ballin never 
got over his self-delusion. A patriotic German Jew, he asked 
nothing better than that German achievement should contribute 
in economic co-operation with other countries to the advancement 
of the human race. When he realized that his hopes were in vain he 
took his own life. 



1^4 Seventy-Six Years 

Another conversation of that same year that also sticks in my 
memory is one with old August Thyssen, a man whose name 
became a legend even during his lifetime. One of the outstanding 
figures in German industry he had risen from the status of small 
manufacturer to be the owner of the largest German coal and steel 
combine. Small of stature, with a white moustache and pointed 
beard he looked, from a distance, like Lenin grown old. Right up to 
extreme old age he possessed a restless creative energy, an amazing 
capacity for organization and an inexhaustible fund of new ideas. 

Although he was easily the richest private individual in Germany 
all his actions were characterized by fixe utmost thrift. Of unassum- 
ing appearance, he would travel third class on the railway and often 
stayed in second-rate hotels. Carrying his own bag he would 
frequently walk from the station to the hotel and bargain about the 
price of the room, afterwards entering his name in the visitors’ 
book — August Thyssen, a signature that might be worth millions. 

Thyssen was a consistent supporter of “vertical” business 
methods by which everything, from the raw materials of coal and 
ore to the polished piece of ironwork, passed through successive 
stages of manufacture. For that reason alone he interested me 
particularly, for as a young man I had stood out against the 
“horizontd” cartels which had maintained prices at Ifigh levels 
and had supported the “vertical” building-up of industry which 
had for its aim the cheapening of consumer goods for the benefit of 
the masses. 

Although August Thyssen presented the most unassuming ex- 
terior and deliberately avoided any ostentation in his personal 
activities, he knew on the other hand how to keep up appearances 
in princely fashion. Long before the war, as one of the staff of the 
Dresdner Bank, I had stayed with him at Schloss Landsberg, his 
country place not far from Miilheim-Ruhr. The numerous stately 
rooms contained many paintings by Old Masters ; a series of Rodin 
sculptures adorned the hall; around the castle were well-kept 
lawns where proudly strutting peacocks aroused us betimes with 
their harsh screaming voices. Silver, table-linen, indeed the entire 
establishment bore the imprint of the authentic ^and seigneur. 

Thyssen was a past master of credit, ’The big banks vied with 
one another to obtain his custom. With those directors whom he 
took into his confidence he would correspond in his tiny close 
handwriting, not always easy to read. But anything he wrote was 
treated wiA the utmost respect. The bills of exchange of which 
Thyssen was wont to avail mmself did not always have the weight 
of Reichsbahk commercial bills, but he made use of thetn because 
they were the cheapest. One could not always tell at first sight 



Director of the Bank 14^ 

whether a bill was destined for pa5nnent of a goods transaction and 
therefore a gentiine commercid bill, or whether it would simply 
be used as an accommodation bill to obtain cash credit. When 
in 1911 it was realized that part of the coal in the Saar district 
could be converted into coke, August Thyssen and Hugo Stinnes, 
together with the Dresdner Bank, founded the Saar-md-Mosel- 
Bergzoerkgesellschaft (Mining Company). August Thyssen took 
up ten million marks worth of shares, Hugo Stinnes ten milli on, 
and the Dresdner Bank one million, so that, in the event of dif- 
ferences of opinion, it might play the part of arbiter. When the 
agreement had been signed Th3resen remarked to Stinnes: 

“Now, Herr Stinnes, we must each pay in the ten million 
marks we have taken up. So I’ll make you a proposition. I will issue 
bills to the value of ten million marks to you which you will then 
accept, and the Dresdner Bank will discount those bills.” 

These were of course not commercial bills but out-and-out 
“accommodation” bills. Stinnes replied: 

“But, Herr Thyssen, I have never yet put my signature to an 
‘ accommodation ’ bill 1 ’ ’ 

“Then I’ll make you another proposition, Herr Stinnes. You 
issue bills to the value of ten million marks to me and I will accept 
them.” 

I don’t remember how the matter worked out. But one thing is 
certain — ^the Dresdner Bank credited the amount. 

During the years of inflation when the issue of “Emergency 
Notes ”• had become a widespread nuisance, Thyssen was of course 
interested. One day Herr Schlitter, the Manager of the Deutsche 
Bank, was going by car with Thyssen to a meeting. On the way 
Schlitter plucked up courage and began: 

“Herr Thyssen, we have a quantity of your Emergency Notes 
in our safes. What shall we do about it?” 

Thyssen was silent, apparently deep in thought. Only when he 
was about to alight from the car did he turn to Schlitter with the 
words : 

“You are qtiite right, Herr Schlitter. What shall we do about 
it?” 

One may have one’s own opinions of these financial methods, 
but they had a powerful effect upon German economy. Thyssen 
undertakings counted among the most efficient, and, technically, 
at the highest level. Both from an industrial and a business 
viewpoint they were brilliantly organized and have contributed 

• Translator's Note, The term "Emergency Money” in this connection 
refers to the later private currency issued and has nothing to do with the 
above somewhat doubtful transaction by Thyssen and Stinnes. 



146 My First Seventy-Six Years 

materially to the fall in German production costs. They have 
provided work, wages and food for tens of thousands of German 
working-class families. 

With all his urge to expand and develop on progressive lines, 
Thyssen never lost his capacity for cool-headed judgment. He had 
nothing in common with those war-obsessed Pan-Germans who 
dreamed of extension towards the adjoining industrial Western 
countries. 

In 1916 I called upon him and let myself go on the subject of 
some of these big-business individuals, their craze for expansion, 
and their conviction that we should win the war and achieve a 
hundred per cent, victory. Thyssen looked at me long and gravely; 
then he spoke one sentence : 

“But supposing, Herr Schacht, that we don’t win the war?’’ 



Part Three 

PUBLIC SERVICE 



CHAPTER EIGHTEEN 


The Founding of a Party 

I WAS forty-one years old when the First World War ended. 
On the day the Emperor abdicated, revolution broke out in 
Berlin, and the German representatives set out on their reluc- 
tant journey to Allied Headquarters to negotiate the Armistice, 
I entered politics for the first time. I became joint founder of a 
Party which in the next few years was to play a considerable r&le. 

My reasons for engaging in political activity were very simple. 
Throughout the whole of the last year of the war Germany was 
already in a state of invisible revolution only restrained by the 
iron discipline of war. Strikes, heated arguments in factories and 
Parliament, protest marches — all these were signs which could no 
longer be ignored. 

We cudgelled our brains as to what the new Germany would be 
like which was destined to emerge from this process of revolution. 
There was no doubt there would be a swing to the Left. But 
would it be as definite as in Russia where, after a brief struggle, 
the extremists had prevailed against the moderate groups ? Would 
Germany, in short, turn Bolshevik; would Lenin — ^as he had 
already intimated — establish his ultimate headquarters not in 
Moscow but in Berlin? 

The danger was there. No-one could foretell how matters would 
develop once the bonds were broken. Since August 1914 too much 
political dynamite had accumulated in cellars, back-yards and tene- 
ment houses. I asked myself and my friends : what was to be done ? 

One of the meeting-places for people who, despite the generally 
prevailing distress, still found time to tackle these questions, was 
the “Nineteen-fourteen Club” a very significant name. It had 
been founded during the last year of peace. I often went to the Club 
and slept there now and again when work kept me too late at the 
bank. There I met kindred spitite — solicitors, journalists, business- 
men, bankers. All were filled with the same anxiety: What was 
one to do ? 

My reply was: “We must prevent the moderates in Germany 
from falling victim to the extremists. We must endeavour to form 
a mighty reservoir of all those elements who, without being extrem- 
ist, are dissatisfied with present conditions. We need a middle- 



The Founding of a Party 

class Left which will throw in its lot with the organized workers in 
the coming Coalition Government.” These deliberations led soon 
afterwards to the founding of the German Democratic Party. 

Meanwhile there were increasing signs that the end might come 
at any moment. On the 3rd November 1918 the sailors of the main 
fleet started to mutiny. Spartacist elements had infiltrated the lower 
decks and hoisted the Red Flag. The revolution began to spread 
through Germany like wildfire. Workers’ and Soldiers’ Councils 
sprang up from nowhere and took over local authorities, this seizure 
of power being accompanied often enough by murder and looting. 

During the early days of November 1918 Berlin prepared for civil 
war. Barbed-wire entanglements appeared in the streets, barri- 
cades were erected from overturned vehicles. Shots whistled 
through the streets in the centre of the town and sent civilians 
scuttling indoors. No-one appeared to have anyauthority: an armed 
mob stood ready to seize the helm. 

The 9th November was the day on which Prince Max of Baden 
announced the Emperor’s abdication, even before the Emperor 
himself had decided on it. He was confronted with a fait accompli. 
His General Staff persuaded him to bow to the immutable decree 
of Fate. But was it really immutable? It is said that on his death- 
bed Hindenburg, whose advice the Emperor finally accepted, was 
seized with remorse. From a subjective point of view he was 
undoubtedly convinced that he did right when in 1918 he advised 
the Emperor to relinquish his throne. It may well be that fifteen 
years later he bitterly regretted this step when he realized what 
had happened to his country as the result of no longer possessing 
a monarchy. ' 

Towards midday on gth November I came out of the Hotel 
Esplanade with a friend and saw the first lorries drive across the 
Potsdamer-Platz filled with heavily-armed Red troops. It was a 
curious sight. People passed by the lorries looking depressed and 
indifferent— they did not even glance at them. The Red revolu- 
tionists shouted, brandished their rifles and generally threw their 
weight about. In among them, before and behind, the usual mid- 
day Potsdamer-Platz traffic carried on. A very curious, significant 
scene, expressive of Germany’s disrupted condition — ^revolution 
in lorries, apathy in the streets. 

In the face of this incident we changed our direction and made 
for the Reichstag with the object of finding a member who would 
enlighten us as to the situation. The great Government building 
was deserted and lifeless. Our footsteps echoed as we continued 
our ghostly progress through the long corridors, At last we reached 



1 My Seventy-Six Yean 

the abode of the Liberal Group: the door was locked, the key was 
on the inside. 

“There must be someone there”, I said, and knocked. No one 
answered. I knocked again. 

Inside the room a quavering voice asked: “Who is it?” I 
recognized it at once — ^it was Stresemann’s voice. At that time he 
was the leader of the National Liberal Group in the Reichstag. 

“Dr. Schacht,” I said. 

The key turned in the lock. Stresemann’s round face was 
visible in the doorway. He bade us enter. 

‘ ‘Have you any recent news ?” I asked, looking round the room, 

“Revolution,” was Stresemann’s terse reply with a weary 
gesture. 

“And the Emperor — our Army — ^the Government — ^the Police?” 

I "don’t know,” said Stresemann. “I’m the last remaining 
man in the Reichstag.” His voice sounded hollow in the empty 
room, usually full of animated conversation and not looking half 
as big as it did now. Stresemann’s face was grey, his eyes tired, his 
mouSi pinched. He drummed on a table with his fingers. 

“And what will happen?” I asked. 

He shrugged his shoulders. “Ebert will probably do something,” 
he said. “Now is his chance. His party is the strongest. If he 
doesn’t succeed ...” 

It was obvious to me that the situation in Germany was in a 
complete mess. And as I have never been one to give in without 
a struggle I said, 

“We tnust do something, Herr Stresemann. If the Left gets the 
upper hand, well and good. But we must start a middle-class Left 
Party so that the Socialist majority don’t have everything their 
own way,” 

“A middle-class Party with left-wing tendencies,” he said. 
“Yes — ^that might be a way out.” 

We left him. 

At the time I knew as well as anyone that the great hour for the 
Socialist Parties had struck. Their persistent efforts for a negoti- 
ated peace, the workers’ tremendous contribution to Germany’s 
blood-sacrifice and last, but not least, their promises of social 
improvements woxdd attract masses of electors to their ranks. 
That would lead to extreme opposition from the Right — as in 
Russia— which might well develop into a war between “ Red” and 
“White”. We must act quickly if we were to achieve anything. 

On the afternoon of the loth November we foregathered in a 
large, darkly-papered study at No. 128, Kurfiirstenstrasse, the 



The Founding of a Party i ^ i 

Berlin residence of Dr. Theodor Vogelstein, where the noise of 
street traffic penetrated but dimly. How long we sat and talked 
there on that loth November I no longer remember. 

From the start it was clear that, for the founding of a political 
Party, the co-operation of the Press was essential. But which 
Press? We called up Dr. Theodor Wolff of the Berliner Tageblatt 
at the Mossehaus. Wolff immediately agreed and promised to co- 
operate. A few hours later Wiesner and Stein of the Frankfurter 
Zeitung had declared their readiness to place their paper at the 
disposal of a new Party on middle-class left-wing lines. With 
these two newspapers in the background our prospects appeared 
somewhat more favourable. 

We finally decided to form the G.D.P. (German Democratic 
Party) on the nth November, the day on which the Armistice 
was signed in the Forest of Compi^:gne. Five days later Theodor 
Wolff drew up the basic proclamation which was accepted by all 
of us. We were joined by the liberal-minded deputy Fischbeck, 
who undertook to act as chairman of the executive committee. A 
draft programme by Dr. Paul Nathan was agreed to in principle, 
but proved unworkable in practice. As time was short and certain 
members showed an inclination to waste precious days in fruit- 
less discussion I called for an “electoral manifesto” which con- 
stituted the public annoimcement of the birth of the new Party. 
This was followed at short intervals during the next few days by 
pamphlets addressed to definite sections of the population. They 
were all of a provisional nature, but endeavoured to broadcast the 
aims of the G.D.P. in all quarters. Even my “electoral manifesto” 
was a programme dictated by the needs of the moment which 
could furnish only a broad outline of the tendencies of our 
Group. But it seemed to me at the time essential that we should 
do something to further our objective, I recall especially one 
sentence of this manifesto : “The peoples of Germany will be 
able to develop their special characteristics independently and 
freely.” 

One of the company— I think it was Count Bethusy-Huc, 
smiled faintly when he read this passage and said: 

“That sentence is typical of you, Herr Schacht. It’s obvious 
that you come from the oldest farming republic in Germany.” 

“I don’t get your meaning,” I said. ‘ 

He laughed. “Those were the words of a Dithmarschen 
•farmer — ^not a Berlin banker. And you say you’re no republican?” 

He was alluding to an incident that had taken place when 
Theodor Wolff read out his proclamation which began with the 
words: “We ate republicans ...” 



IJ3 My First Seventy-Six Years 

“Stop!” I interrupted. “I can’t sign that. I’m a monarchist.” 

General astonishment. How, the others demanded, could a 
monarchist be a co-founder of a Democratic Party? 

“Gentlemen,” I said, “there are quite a few constitutional 
monarchies in the world which are democratically governed. Do 
you know the difference between a republic and a democracy? 
One is a type of State, the other a form of government. Demo- 
cracy can be Conservative, or Liberal, or Socialist.” 

Theodor Wolff gave in and began again. This time the sentence 
ran: “We base our standpoint on republican principles.” 

I signified my agreement. What else could I do ? At the moment, 
nothing. The Emperor was in Holland, the German monarchy 
had ceased to exist. 

But what confusion can be caused by catchwords! If anyone 
mentions democracy nowadays most people immediately connect it 
not only with a republic but also with a leftist political attitude. 
They mistake the type of State — ^that is the form of its construction 
— ’for the political content of the State. Democracy signifies the 
manifestation through the Government of the political will 
expressed by the free vote of all citizens and the decision of the 
majority within the existing State construction. This political will 
undergoes changes as the result of experience and according to the 
trend of economic and cultural developments, as well as those of 
foreign policy. If the word Democracy were synonymous with any 
leftist determination — ^that is to say with Socialism or Liberd 
Radicalism — ^it would lead to political crystallization. Democracy 
is a philosophy of life only so far as it signifies that the country 
must be governed according to the will of the majority. But 
Democracy is no hard and fast directive for a definite philosophical 
course of action. The political apprehension of the majority can 
change, and does change, as the result of experience. Throughout 
the course of history Democracy has prevailed under republican, 
oligarchic and monarchical types of state. It has even contributed 
on occasion to the temporary investment of the Government with 
full dictatorial powers. 

The sumodses we had entertained in connection with the form- 
ation of the G,D,P. came to pass. The Social-Democrats failed to 
obtain a majority in the National Assembly at the Elections of tlie 
19th January 1919. The G.D.P, secured seventy-four seats, and 
at a critical juncture ensured that Socialist theories were not 
applied in too one-sided a fashion. The Social-Democrats were 
compelled to form a Coalition Government with the middle-class 
Left. 

The G.D.P. produced two Ministers who were invaluable in 




Saying good-bye to Oioeii D. Young at the Gare St. Lasare, Paris, after the 
Young Confcreme, ip29 



With his first wife mid their son Jens 


The Founding of a Party 153 

helping to establish a gradual and continuous political develop- 
ment in place of an extremist upheaval. One was Hugo Preuss, the 
expert on constitutional law who had played a decisive part in the 
working out of the Weimar Constitution; the other, Walther 
Rathenau, who in 1922, as Foreign Minister, enabled Germany 
once again to take part in negotiations to resume her trading 
activities as a result of the Treaty of Rapallo. 

I myself was very pleased with this success. Party-political 
activities had no attraction for me. I declined to stand as a Paity 
candidate and in fact only participated in it for a short period, 
j,.. ' I have never in my life been afraid. During the Revolution in 
Berlin I did not change my style of clothing, nor did I wear dark 
glasses, and I continued to go about Berlin every day. In the brief 
interval between the Revolution and the National Assembly I 
made several public speeches in which I spoke my mind plainly. 
The public was by no means always friendly. But it realized that 
' I was not afraid. 

On one occasion only was I prevented from speaking. It happened 
in Vienna before a packed house. Spread about in die front rows 
were some fifty rowdies who set up such howls and catcalls when 
I appeared that I had to abandon my speech. I was one against fifty. 
Behind them were three thousand citizens who had come to hear 
about the German Democratic Party’s programme. These three 
thousand allowed themselves to be terrorized by fifty hooligans 
instead of throwing them out. Freedom without order spells ruin 
to any democracy. 

On another occasion I addressed the German Officers’ Associ- 
ation. This organization had invited six groups to send one speaker 
each to a meeting, each speaker to have twenty minutes in which to 
present his current programme in detail to the audience, his 
place in the proceedings to be determined by lot. I drew number 
one, stepped on to the platform and was inunediately conscious 
of an icy atmosphere of antagonism emanating from the audience. 
If I did not want to waste my breath I must do something wthin 
one minu te to jolt them out of their superior aloofness. 

“Ladies and Gentlemen,” I began, “I am speaking as a repre- 
sentative of the G.D.P. which, as you must surely know, is the 
Party of the Berliner Tageblatt (‘hear, hear’), the Party of Jewish 
High Finance (‘quite right’), the Party of the Golden Inter- 
national (loud cries of ‘quite right’)”. I paused deliberately ; then 
went on; 

“You see. Ladies and Gentlemen, these idiotic phrases are by 
way of preliminary remarks in order to determine the kind of 
audience I am addressing ...” 

6 



154 Seventy-Six Years 

The officers were taken aback and probably somewhat abashed. 
They leaned forward and listened attentively. No one tried to 
interrupt. 

This speech marked the end of my active participation in G.D.P. 
affairs. I retired once again into my bank and devoted myself to my 
work. In the ensuing period the Democratic Party did not fulfil 
the promise of its magnificent beginning. It did not understand 
how to carry its principles into effect ; its representatives were no 
fighters. Many sturdier political Parties increased their toll of 
voters at the expense of the G.D.P. 

But on the 19th January 1919, in the hour of revolution and of 
the relaxation of all civil control, it did fulfil the task of assembling 
the Liberal-minded elements among the German citizenry and 
endowing them with a voice against the socialization programme of 
the German Socialist Party. 

I resigned when, years later, in connection with the expropri- 
ation of the aristocracy, the Party attacked the fundamental law of 
private ownership. 



CHAPTER NINETEEN 


Member of the Workers^ and Soldiers^ Council 

O NE of the most incredible chapters of my life is entitled: 

I “Dr. Hjalmar Schacht — ^Member of the Workers’ and 
Soldiers’ Council”, and the scene is laid in Zehlendorf. 
The Revolution in Zehlendorf started with the Gemeinde- 
vorsteher (chairman of the parish council) sending out invitations to 
the inhabitants to attend a meeting in the big hall of the granunar 
school. There he made a speech which for sheer crass bumbledom 
beat anything I have ever heard. The parish council, he said, had 
prepared a cheap popular lunch in an open-air restaurant situated 
on the borders of Zehlendorf, right on the arterial road from 
Berlin. When the revolutionary hordes came pouring out of Berlin 
they would be attracted by this cheap lunch, appease their hunger 
and by the time they entered Zehlendorf itself would be as tame, 
so to speak, as lions in a state of repletion. 

The idea that Berlin “Reds” would come dashing out to 
Zehlendorf with fifty Pfennig in their pockets in order to partake 
of a popular lunch tickled me immensely. Needless to say, not 
a soul came haring out to the place. The city’s large, well-heated 
assembly rooms proved far more attractive to the crowds than a 
popular-price lunch in a suburb. 

Someone else, however, did turn up — actually during the chair- 
man’s speech. His name was G6hre and he was one of the Social- 
Democrat members of the Reichstag. With a movement of the 
hand he dismissed the chairman from his position at the table, took 
his place and announced in a loud voice: 

“Now — ^it’s owr turn!” 

The meeting was struck dumb. The chairman made himself 
scarce, the voices died away. I watched the proceedings, not 
without a certain irony. The people of Germany have never been 
able to resist a man who forces his way on to the platform. 

Now Gohre was anything but a man of violence. I knew him 
personally : he was what is known as a bit of a softy, a good-natured 
juggins — a theologian, clergyman, and a man of high principles 
who had joined the Socialist movement as far back as 1890 byway 
of the Naumann set and their National Social enterprise. He was 
fifty-seven years old and a member of the Germaa SgcUIist 



156 My First Seventy-Six Years 

Party who, on the very day he spoke to us, had appointed him 
Under-Secretary of State for War. (No one was better qualified to 
testify publicly to the pacific intentions of the German Socialists 
than the said newly appointed Under-Secretary of State for 
War). 

Carried away by the historic occasion Gohre let his enthusiasm 
get the better of turn, became too big for his boots and announced 
that the sovereign power was now vested in the German Socialist 
Parties — ^the German Socialist Party who were in the majority, 
and the Independent Socialists. 

The speaker had got so far when I interrupted him: 

“I assume that this sovereign power is valid only until the 
National Assembly proclaims the Constitution!” 

Gohre was silent for a moment; there was a murmur of voices 
in the audience. Surely it was very presumptious to interrupt such 
a great man at such a great moment ? 

“Yea,” Gohre then said — perhaps somewhat nonplussed but 
perhaps also convinced — “Yes — ^but only until the National 
Assembly!” 

It was very important to make the Revolutionary Government 
realize as soon as possible that they were only a stop-gap. At that 
time everyone hoped that elections for the National Assembly 
would result in a different state of affairs. And our hopes were 
justified. 

Much gratified I sat down. This was on the loth November 
1918. That same afternoon I went to Berlin and discussed with 
my friends the formation of the Liberal left-wing Party. 

But first of all there was an unexpected sequel to the Zehlendorf 
meeting. When Gohre had finished, a “Workers’ and Soldiers’ 
Council” was elected for the parish and community of Zehlendorf. 
Those soldiers who were present nominated their man, the second 
representative was determined by acclamation. My name was called 
the greatest number of times, so from that moment I became a 
member of the Zehlendorf Workers’ and Soldiers’ Council. 

A third representative had yet to be elected from among the 
ranks of the workers. 

"Will members of my own Party please stand up!” pleaded 
Gohre. 

Three men stood up, one of whom was quickly chosen. The 
“Government” of Zehlendorf was now in a position to function. 

On the way to the town hall the soldier informed me with great 
glee that the British Fleet had just sailed into Wilhelmshaven 
flying the red flag. I stared at him, imable to believe my ears. 

“Do you really believe that, or is it meant for a jo£e?” 



Member of the Workers’ and Soldiers’ Council 157 

“It’s true, I swear it!” 

“May you always be as credulous,” was all I could say. 

“Government” in the town hall was not made easy for us. 
It was Sunday and not a single official was present. The cupboards 
containing official documents were locked, the tables bare. I was 
vividly reminded of the period of occupation in Belgium when 
von Sandt, the Regierwigsprdsident,* was supposed to take office 
as civilian governor in Brussels, and looking round the empty 
room, exclaimed: “How can anyone begin to rule here? There 
isn’t even any revenue I” 

In order, however, to signify our good intentions we drew 
up a proclamation to the people of Zehlendorf which appeared, 
proudly signed by all of us, in the next number of the local paper. 
The Workers’ and Soldiers’ Council did not meet again. Our 
proclamation will doubtless have found its way into the local 
archives. All the rest of the doings we turned over to the existing 
officials. 

The successful result of the elections in January 1919 did 
not mean that the Socialist danger was eliminated. On the con- 
trary, the war within the left-wing Socialist ranks was only just 
beginning — ^the struggle for power between the Socialists, the 
Independent Socialists and the Spartacists. 

In order to understand the situation it is necessary to explain 
that the Government at that time was in the hands of a “Council 
of People’s Delegates”. These included not only the majority- 
Socialists Ebert, Scheidemann and others, but also the Indepen- 
dent delegates Haase and Dittmann. The Independents leaned 
strongly towards the radical aspect of socialism, that is towards 
Karl Liebknecht and his “Spartacus” League, backed up by the 
revolutionary naval divisions of Kiel. 

On the 25th November 1918 the “Council of People’s Dele- 
gates” had decided to summon a National Assembly with powers 
to formulate a constitution, and thus establish themselves on the 
basis of a parliamentary Republic. This decision was confirmed 
between the loth and the aoth December ipi8 by the “National 
Conference of Workers’ and Soldiers’ Cornells”, thereby ensuring 
that there would be no “Russian Revolution” in Germany. 

Following this there was a split in the ranks of the Independents. 
The left wing amalgamated with the “Spartacus” League on the 
ist January 1919 as the German Communist Party. The majority- 
Socialists who desired to govern, not according to the Russian 

* The nearest English equivalent would be Lqrd-Lieutenant. 



1^8 My First Seventy-Six Years 

system, of Soviets, but according to political and civic methods, 
became the protagonists of the fight against Communism. 

About Christmas 1918 there v?as a dangerous rising among the 
“People’s Naval Divisions’’ surrounding the palace in Berlin, and 
shortly after the New Year there were fierce battles in Berlin’s news- 
paper districts, led by Liebknecht and Ledebour on the Com- 
munist side and by Noske on the side of the majority-Socialists. 
Temporary volunteers, former officers and battalions of Social- 
Democratic workers made common cause against the menace of 
Bolshevism. 

On one occasion during this period of upheaval, when Germany’s 
fate hung by a thread, I stood at a window in the Hotel Kaiserhof 
and watched the deployment of the Social-Democratic Trade 
Unions summoned by Ebert to hold the Wilhelmstrasse against the 
Spartacist demonstrators by sheer force of numbers. A mighty 
torrent of humanity poured into the Wilhelmstrasse — ^workmen, 
artisans, humble townsfolk — ^any-and-everybody who supported 
the Trade Unions and Ebert’s policy of law and order. 

All at once the Spartacist masses streamed out of the Mohren- 
strasse, advanced at right angles on the trade-unionists, collided 
with them and pulled up short. Recriminations followed, then 
blows. Suddenly, from the Spartacist direction, something flew 
through the air and fell among the trade-unionist ranks. The dull 
thud of an explosion reached me, and I knew that it was a hand- 
grenade. It had an immediate, sobering effect. The Spartacists 
withdrew, the others clustered around one of their number who 
lay on the ground — dead. The hand-grenade had burst in full 
force, penetrating the abdomen. An unknown victim — a single 
member of an army of men and women who, at a summons from 
their Party leader, had come pouring out of all the tenement- 
houses in Berlin to preserve decency and order. 

Matters did not stop at this one death. In March 1919 the 
Revolution was responsible for the loss of twelve hundred lives 
in Berlin alone. The decision of the Socialist majority to rule 
Germany with the help of Parliament and not by means of a 
dictatorship consolidated our position at the time as a Western 
Power and, in addition, saved the Poles, Czechs and Hungarians 
who were thus able to revert to the simple, unpretentious con- 
ditions of civilian life — ^but at the cost of fierce fighting and 
bloodshed throughout the country. 

Defeated in war and rent by internal strife, the German people 
in 1919 fought a lonely fight which since then has developed into a 
world fight of front-line importance and inflicted a severe defeat 
on Bolshevism. 



Memher of the Workers^ and Soldiers' Council 159 

Following this effort — ^which benefited not only the Germans 
themselves but also the Poles, Czechs, Finns, Esthonians, Letts, 
Hungarians, Roumanians and Bulgarians — Germany, willing, 
work-loving and more addicted to order than most other nations, 
could have achieved her own peace in the world but for the appear- 
ance of another spectre, not from the East this time, but from 
the West, namely, the reparations demands of her former enemies. 

I went through my own private experience with reparations at a 
very early date — long before the time when I officially strove for 
their cancellation. But before I go further into this matter I will 
explain how reparations came to be imposed in the first instance 
and why they were entirely lacking in common sense. 

With this object I must ask my readers to view the war not, as is 
customary, through the eyes of a soldier but through those of a 
business-man. 

Every modem war begins vnth whatever means are available and 
finishes with weapons which, at the beginning, were undreamed of. 

From a purely external point of view the First World War started 
in much the same way as the war of 1870 — ^patriotic songs, rifles 
hung with flowers, bright-coloured uniforms and that mixture of 
deadly earnest and surface gaiety which takes possession of men 
when confronted by death. The equipment of troops was so primi- 
tive that during the early months of the war French soldiers (so I 
was told later) included in their already bulky battle-kit bundles of 
firewood so that they might be able to cook their own meals in 
camp. When armies set forth in August 1914 fighting was still 
pictured mainly as an affair of bayonet charges and shooting at 
close range. Four years later strikes and revolts among the civil 
population of Britain, France and Germany indicated that the 
incessant drain on the nations’ economic resources was in itself 
responsible for the collapse of the war. 

Conditions in the countries of both groups of belligerents 
appeared to be fairly similar. Albert Ballin had hoped that the 
war would end in a complete political fiasco which would give 
business-men a chance of enlisting the voice of reason on their side. 
That hope might even than have been realized. That it did not was 
due to ffie intervention of a third, extra-European Power in the 
progress of ffie war. The United States at the beginning threw in 
her economic potential and later her armies, to Europe, thus 
deciding the war in favour of the Entente Powers. 

It is not for me to go into the reasons for the entry of the United 
States into the war. It is a fact, however — ^as I wrote later in my 
book The End of R^aratiom—th&X in so doing she assumed a 



i6o My First Seventy-Six Years 

political responsibility with which, at that time, she was not yet 
fit to cope. This is not, in my opinion, an unfair criticism. Many 
Americans have condemned America’s political defection after the 
war far more harshly than I have done. 

According to human i-eckoning the war was bound to end in 
general exhaustion. The map of Europe would presumably have 
needed only slight alterations. This same general exhaustion, this 
obvious senselessness of technical warfare would presumably have 
given rise to profitable enlightenment on both sides. I'he best 
thing that could have happened from the standpoint of world 
history would have been for the first technical war to have ended in 
a stalemate. 

The reparations demands of the Allies after World War I 
aroused national resentments, and resentments are not a good 
foundation for a peaceful foreign policy. Both right and left-wing 
extremists made capital out of the increasing political bitterness, 
the growing economic distress in Germany, till in 1933 they 
eventually created a situation where the only question was whether 
the left or the right would be the first to achieve its object. Two 
simple calculations go to show that: 

The Communist Party, which had entered the Reichstag on the 
6th June 1920 with two seats, possessed exactly one hundred seats 
on the 6th November 1932 (twelve years and five months later), 
and with twenty votes behind the German Socialist Party, was the 
third biggest Party in Germany. 

Hitler’s National Socialists, however, who under that name 
had only stalked into the Reichstag on the 20th May 1928 with 
twelve deputies, had nearly two hundred seats in 1932, and had 
become the strongest Party in Germany. 

The politicians, who had brought about this situation by their 
astronomical demands on the Reich, who refused to be dissuaded 
from their economic folly, today disclaim all responsibility and 
wash their hands of the whole business. 

The war also claimed its victims from my own immediate 
family. My brother Oluf died as the result of an illness contracted 
during the war years. Our youngest brother William — ^fair-haired, 
lovable, my mother’s favourite of all her children — ^had been killed 
in the Batde of the Somme. The news of his death in that ghastly 
Western carnage of men and materials had affected my parents 
more deeply than hunger or privation. Whenever I had time I 
would go over from West Zehlendorf to Schkehtensee and talce 
one of the children along to see the grandparents— either Inge, 
now in her teens, or eight-year-old Jens. 



Member of the Workers' and Soldiers' Council i6i 

Even at that time I was unable to ignore the political problems 
that were bound to arise after the war. The full extent of our losses 
had not so far been revealed. No-one knew as yet that our own 
country had one million, six hundred thousand dead and three 
and a half million war casualties — ^wrecked, maimed by the pro- 
ducts of an industry we had all eagerly helped to build up. Anyone 
with eyes to see, however, would redize that after this war there 
could no longer be any question of an Empire with its social 
problems unsolved ; no old-style Prussian militarism (it had already 
met its doom on the battlefield and been forced to give place to the 
new technical methods of warfare) ; no division of electoral rights 
into three classes {DreMassenwahlrecht) and no permanent order 
of society. The war had swept away all that. Something new must 
be found to replace the old and the outworn. What would it be 
like ? 

Such were Germany’s domestic problems following her defeat 
in the technical war. It was not to be expected that our former 
enemies would be able to understand their full scope. But neither 
was it to be expected that they would so completely ignore Ger- ' 
many’s struggle for her position in the West, as happened during 
the ensuing twelve years. I had a foretaste of it as far back as 1919. 
After a Government had been formed in Germany I was called in 
to discuss with Allied representatives Germany’s economic con- 
tribution to the victorious Powers. A deputation of industrialists 
and experts was sent to The Hague where an Allied Conunission 
awaited us. My task was to go into the question of deliveries of 
potash and other chemical products. 

Our reception reminded me vividly of illustrations in my school 
history books ; Persian Satraps reccing a DeputaUon from d^eated 
Athens. 

A positively medieval arrogance characterized the members of 
the Allied Commission. Not only was there no question of chivalry 
— ^there was also a complete lack of common civility. I remember 
one occasion when not enough chaii’s had been provided for the 
Germans so that most of the German members of the Commission 
were obliged to take part in the discussions standing. 

I made no secret of my disgust at this churlish treatment. My 
fellow-members of the Commission were frankly nervous. 

“For goodness sake. Doctor,” one of them whispered to me, 
“TCou can’t do thatl You can’t go lodging complaints!” 

‘T’ll soon see if I can’t lodge complaints,” I said, and went 
across to the Allied General who presided at the meeting. 

“We have been accommodated in the worst hotels; the food 
is wretched; we are prevented from going out; our movements are 

6 * 



i62 My First Seventy-Six Years 

restricted and we arc obliged to stand during the negotiations with 
our Allied partners.” I was furious. “ I would ask you if you please, 
General, to remedy these deficiencies.” 

“You seem to forget that your country lost the war,” was the 
frigid reply. 

I returned to Berlin the richer for the experience. Nothing that 
happened afterwards surprised me as greatly as it would have done 
had I not happened to attend that conference. 

My visit to The Hague brought me up against the problem of 
reparations for the first time. It was to give me plenty to do in the 
years ahead. 

At first I admittedly devoted all my attention once again to 
bank matters. For by now a new spectre brooded over Germany 
which concerned the country’s domestic situation as well as the 
reparations demands of our former enemies: the inflation of 
German currency. 



CHAPTER TWENTY 


T he years 1920 to 1924 are still known as “the period of 
inflation”. Although few people can explain the meanin g 
of the word it has come to signify many things for whole 
generations. 

To all who still remember it “the period of inflation” stands for 
the hunger blockade; the surrender of real values to foreign 
Powers; political outlawry; regrouping of the population; the rise 
of obscure figures to sudden wealth. To the hitherto wealthy 
classes it meant loss of capital, to the well-to-do, the moderately 
comfortable and the small man, it spelt ruin. In Government 
and official circles it signified corruption ; political jobbery between 
the Parties, the Weltrmacht and the Ministries; increase in child 
mortality, and in crime ; the yoimg crippled with rickets, the old 
dying before their time. All this and much beside is summed up in 
the expression “period of inflation”. 

Inflation is loss of capital in its widest sense. The Latin word 
signifies “blowing up”; in its narrower sense therefore it signified 
the blowing up of a currency. In Germany this is easy to grasp 
from a statistical point of view: at the end of the war the mark was 
worth about half as much as at the beginning of hostilities. A gold 
mark (the standard on which the paper currency was based) was 
worth 2.02 paper marks. But in November 1923 a gold mark was 
worth one billion paper marks. This is howitappeared in figures : — 
1 ,000,000,000,000 . 

Within five years the German Reichsmark had sunk to a five- 
hundred-milliardth of its value. At the end of the war one could, 
in theory, have bought five hundred milliard eggs forthesame price 
as that for which, five years later, only a single egg was procurable. 

Such comparisons are mere juggling with figures. But for 
the one-and-only breadwinner of a family they represented not 
juggling with figures, but direst need. 

We do not find the word Wakmrig in other languages. There 
is numnah or currency, i.e. funds in cash or in circulation. Our 
German word expresses, in its deepest sense, the significance of 
monejr as a means of payment. It must endure (w^ren), it must 
last. It must possess stability, i,e. it must preserve its value. 
Before bank-notes or paper money were invented, payment was 



164 My First Seventy-Six Years 

made in material goods which did not change their value. The 
Latin word pecimia derives from pecus, a head of cattle, and dates 
from the time when flocks and herds constituted the medium of 
exchange with which other goods could be obtained. The most 
widespread means of exchange were BmtmetaUe or precious metals 
— gold, silver, copper. Of these, as the result of thousands of 
years, gold has established itself as the favourite and achieved its 
position as the most precious means of payment. Through all the 
paper money operations the value of gold as a standard has never 
altered. 

Since the introduction of paper money by modern States, the 
critical task of monctaiy policy has been to preserve the value of 
such money. The purchasing power of money must remain the 
same throughout the passsage of time. It is only by means of a 
stable currency that the system of barter has been superseded. 
When a worker nowadays receives his pay-packet at the end of the 
week he must be able to feel that he can buy as much with it the 
following week as he did in the past one. He must be able to save 
until he has sufficient to purchase an allotment, or build himself a 
hut or cottage. 

The introduction of bank-notes or Government paper currency 
has been made feasible only because the State or the Central Bank 
have promised to exchange the paper money for gold at any time. 
To ensure this possibility (i.e. the redemption of paper by gold) at 
any time must therefore be the aim of all issuers of paper eurrency. 
Any State or Central Bank who deliberately or earclessly flings 
away this possibility is guilty of a crime against its citizens. Were a 
private individual to do so he would be branded as a defaulter and a 
cheat. 

In former times there have been States that have gone bankrupt 
as a result of bad management; the deliberate manipulation of 
currency, however, has become a familiar feature only of the most 
recent history. As a result of two world wars, many countries have 
been reduced to desperate financial straits and looked upon devalua- 
tion of currency as the only way out. This deliberate devaluation 
was usually preceded by a natural decline in the value of paper 
money. When a nation’s expenses exceed its income and it has to 
try and meet its commitments with such a quantity of paper money 
the value of paper money declines. 

Such was the situation in which Germany found herself as the 
terrible outcome of World War I. And not only Germany. Other 
natioiw did not escape inflation, or devaluation of paper currency. 
But Germany was the hardest hit. It was the masses in Germany 
who suffered most under the inflation. In matters of money — as 



Inflation 165 

indeed in all matters of business — the educated section of the 
population grasp tlie devaluation process more quickly than the 
uneducated masses. Anyone who was alive to the signs of approach- 
ing inflation could safeguard himself against losses in paper 
currency by the purchase of assets which, by contrast, would main- 
tain their value, e.g, houses, real estate, manufactured goods, raw 
materials, etc. This wholesale recourse to real values enabled not 
only the well-to-do but also, and especially, the unscrupulous to 
preserve and even possibly to increase their assets. 

As a result of this struggle for self-enrichment and financial self- 
preservation, based on exploitation of the ignorance of the masses, 
every aspect of business life became vitiated. All savings activity 
ceased. Those unable to find any real values spent their money as 
rapidly as possible on pleasure. The creation of new capital goods 
and new production projects declined for lack of the necessary 
capital ; the banks were no longer in receipt of their former steady 
flow of savings and cash deposits. As devaluation spread so its rate 
of progress accelerated. Those who were no longer able to meet 
even their daily needs — ^the labouring classes, officials and people 
with fixed incomes — ^were seized with a tremendous unrest and 
increasing bitterness. The payment of enhanced wages in paper 
money had no effect — on the contrary, the more paper currency 
was spent the more rapidly its value declined. 

Many business firms took to paying their workpeople with 
foodstuffs. But that was only an imperfect and partial emergency 
measure. Firms requiring capital for business and investment 
adopted the practice of issuing bonds based, not on money, but on 
coal, electric kilowatt-hours, potash, cement, etc., which constituted 
the real value of such bonds . 

The distress engendered by inflation was immeasurably enhanced 
by the reparations demands imposed by the victorious Powers in 
spite of the misery prevailing in Germany. Enormous deliveries in 
goods were required, and most of the proceeds from exports re- 
ceived in foreign currency went to swell the war payments. Any 
foreign securities or shares in businesses situated in neutral coun- 
tries and still in German possession had to be included in the 
tribute instalments as they fell due. 

Since it was impossible even with such vast sacrifices for Ger- 
many to pay the reparations imposed upon her at Versailles, 
reprisals were instituted against her in 1923 in the shape of the 
military occupation of the Rhineland in defiance of the Versailles 
Treaty. The population reacted to this violation of justice with 
every kind of passive resistance, refusal to work and sabotage. 
This in turn made fresh heavy demands on the Government 



1 66 My First Seventy-Six Years 

who had to continue pouring wages and salaries into the occupied 
area without receiving any commensurate return. 

In 1933 the progress of devaluation achieved a really terrifying 
momentum. The demand for Treasury notes was so great that the 
Reichsbanlc was unable to issue anything like the required number. 
In addition to the Reichsbanlc there were several private presses 
engaged in the printing of Treasury notes for ever increasing 
denominations. The day was rapidly approaching when the price 
of a tram ticket was a milliard-mark note. Many municipalities and 
industrial firms took to printing their own “emergency notes” to 
meet their expenses. The Reichsbanlc could not refuse to accept 
this emergency paper or to treat it as of equal value with their own 
notes. It became impossible to control the issue of emergency 
notes. The entire circulation of notes and coin was reduced to 
chaos. 

During the whole of that period, i.e. from early 1919 till 
towards the end of 1923, neither the Reichsbank nor the Govern- 
ment made any effort to establish a stable currency. The Board of 
the Reichsbank took the view that it was useless to attempt to 
stabilize the mark so long as it was uncertain how much Getmany 
would be able to pay in war damages and so long as no agreement 
had been reached on that point with the victorious Powers. It was 
difficult to counter this view, which was shared by the Government. 
A stable currency which would have met not only the country’s 
internal economic needs but also the colossal foreign commitments 
was in truth impossible. 

There was, however, another possibility — one which I ex- 
pounded and urged in a number of articles published in various 
newspapers, notably the Berliner Tagcblatt and the Vossische 
Zeitw^. It went to my heart to see how devaluation served only to 
enrich the sharpers and those in the know, while the lower classes 
watched their incomes dwindle and their savings disappear. I 
suggested the introduction of a coinage based on gold, but in 
correspondingly restricted quantities, which would enable the 
worker to estimate the daily decreasing value of his paper money 
wages. Further, this coinage based on gold would be of valuable 
assistance in the export and import trade. 

This suggestion was followed up to a point when an issue of 
small dollar coupons was launched in the middle of 1923, which at 
any rate served to stabilize part — though admittedly a very small 
part — of the money transfers and demonstrated the gap between 
gold coinage and paper currency. 

During 1923 the conditions of the masses grew so much worse 
that Communist movements increased to an alarming extent. 



Inflation 167 

Political unrest developed to a point ivhere the stabilization of 
money became a vital necessity if the whole country were not to 
collapse. If one realizes that these money tokens (notes) were sent 
in gigantic bundles by lorry and railway wagon to cities, and 
provinces ; that in order to produce one currency note more working 
time was required by paper-makers, engineers, printers, litho- 
graphers, colour experts, etc., than was represented by the value 
of the finished article, it may be possible to understand the whole 
crazy set-up during that period, which played the deuce with the 
nation’s most valuable capital — ^the worldng power of the people. 

Only rarely did the opportunity occur of hitting the sharpers and 
profiteers where it hurt. One instance, however, where I did get 
the chance of doing so was not without its humorous side. 

The social upheaval of 1918 and 1919 brought to the surface a 
lot of queer types. In almost all the Provincid Diets the Social- 
Democrats played a decisive part, held in check here and there by a 
few sound, genuinely democratic representatives. But these Social- 
Democrats were not always such fearful anarchists. Many of them 
only lacked the knowledge and experience necessary for their 
tasks and entertained all manner of impractical projects and 
expectations. 

Such was the case in the tiny province of Mecklenburg-Strelitz, 
whose population of one hundred thousand remained absorbed in 
agriculture and those old-fashioned customs that Fritz Reuter 
has described with such touching irony. In Neustrelitz there was 
a socialist writer about whom I can remember nothing except 
that he had been several years in prison, so I was told, for 
committing perjury in order not to incriminate a much-loved 
wife, which, when all’s said and done, speaks fairly well for his 
character. 

I had some connection with Neustrelitz through my member- 
ship of the supervisory board of the Mecklenburg-Strelitz Mort- 
gage Bank. One of the members of the Diet, who was at the 
same time chairman of the bank and with whom I was on friendly 
terms, called me up one day and urged me to come to Neustrelitz 
immediately. The Diet was on the verge of committing a very 
stupid action and he needed my help in preventing it. 

'The situation that confronted, me on roy arrival was as follovrs: 
two Jewish brothers from Portugal had made up to the Diet with 
all manner of schemes for which they had already managed to 
obtain concessions or hoped to obtain them. One of these conces- 
sions was the lease of all the cane and reed crops from the numerous 
lakes in the Province. While the grantog of this concession had, 



1 68 My First Seventy-Six Years 

aroused the anger of all the farmers and fishermen, a fm-ther scheme 
had provoked even livelier opposition. The brothers proposed to 
build a Casino in Neustrelitz similar to the one in Monte Carlo. 

From the point of view of speculative business it was quite a 
good idea. Unfortunately, it was also somewhat unethical, an 
aspect which the brothers were unable to appreciate. Neustrelitz 
is only one and a half hours from Berlin, on a good motor road, in 
enchanting surroundings of woods and lakes. The focal point of 
the scheme was the magnificent castle, formerly the property of a 
Grand Duke, situated in a wonderful park which had been chosen 
as the site for the Casino and the centre of social activities. In 
addition to the castle itself, with its superb rooms, its landscape 
gardens and terraces, the adjoining buildings contained all other 
requirements and amenities — stables, garages, bathing establish- 
ments, tennis courts, deer park — ^in short, everything that visitors 
might desire for their entertainment. The Neustrelitz Casino 
would undoubtedly have proved a great attraction to Berlin’s 
snobs and new rich. 

But the President of the Diet, as wc have seen, was a man of 
ideals, and despite the alluring manner in which the scheme had 
been presented he had grave doubts about it. The thing that 
worried him most was that he could think of no other tisc to which 
the deserted castle might be put; I asked permission, therefore, to 
look over the castle — ^in which, be it said, I was lodged in princely 
fashion. Almost at the beginning of my tour of exploration 1 made 
a noteworthy discovery. Among other places I was taken into the 
so-called Silver Room and realized what I had already been told, 
namely, that the Grand Duke of Strelitz must have been one of the 
wealthiest princes in Germany, 

In four or five large rooms, each with two windows, I found 
table after table and cupboard after cupboard packed with the 
most valuable plates, dishes, goblets, tanlcards, cups, beakers, 
knives, forks, spoons, tableware, cash-boxes, caskets, snuff-boxes, 
etc., which had been acquired and added to by generation after 
generation. Everything was of pure gold, silver, or other precious 
metal — ^wonderful examples of the goldsmith’s art, set with precious 
stones or wrought, chased or inlaid. The rooms were on the ground 
floor with large windows giving a good view from outside, and so 
lightly barred that they positively asked to be broken into. I 
expressed my astonishment, adding that the Revolution had evi- 
dently been a very peaceful affair in that part of the world, and 
urged that these valuables should be consigned to some reliable 
safe-deposit, as eventually they were. 

At the same time I conceived the idea, accepted by the Prime 



Inflation 169 

Minister in the ensuing debate, that the castle might be put to good 
use as a new provincial museum, in which every kind of rarity of 
natural, historical and artistic interest should be housed. Instead of 
a casino, therefore, Neustrelitz became the possessor of a museum, 
and I was able later on to obseiwe with my own eyes that from every 
point of view it had developed into an interesting and instructive 
collection both for the local inhabitants and for visitors. 

The two brothers hastily abandoned all their concessions and 
schemes and disappeared for good, leaving the cane and reed of 
the Mecklenburg lakes in the hands of their former tenants. As a 
bait for the proposed casino they proved useless. And from cane 
and reed will sound the cheerful twitter of the reed-bunting long 
after the history of the Neustrelitz Museum is forgotten. 

The question of these Jewish brothers, however, brings us to a 
problem which was later to occupy first Germany then the entire 
world — the question of the origin of German anti-Semitism. 

One thing is certain: this anti-Semitism arose, in the form in 
which we now know it, during the early years after World War I. 
The fact that under Hitler it was deliberately exploited and 
artificially stimulated for propaganda purposes until it became a 
beacon-fire that set all Germany aflame, makes no diffei-ence to the 
fact that during those early years the immigration of East-European 
Jews assumed serious proportions. 

Practical experience has long shown that the Jews are, in the 
abstract, better business- and tradesmen and more gifted than the 
Germans. The percentage of Jews in employment demanding 
abstract thinking is substantially higher than in jobs of a mechanical 
or purely physical nature. The result was that during the inflation 
period the immigrant Eastern Jews managed, in the shortest 
possible time and, so to speak under the very eyes of their fellow- 
men, to rise out of complete destitution to very noticeable affluence. 
They occupied the garden suburbs and the large private houses 
whose owners had become impoverished. In a word, they created a 
public scandal. 

The following extract is taken from a report written in the 
year 1920 by the Chief of Police in Berlin to the Minister of the 
Interior ; it refers to the so-called slum district of Berlin and runs : 

The district is alive mth hordes of the most unsavou^ elements, 
dangerous not only from a criminal but also from a political st^d- 
point, since they have brought with them from_ their Polish- 
Russian homeland Bolshevist ideas which they introduce and 
continue to spread here. Furthermore, tlm health of the people 
is being seriously threatened by these immigrants.^ The mere 
idea of cleanliness is entirely foreign to them. Their dwellings 



170 My First Seventy-Six Years 

are incredibly overcrowded and crawling with filth and vermin. 
At the same time they are stocked to capacity with all manner of 
food and delicatessen illicitly acquired and as illicitly handed 
on. Finally it should be mentioned that the present acute housing 
shortage is needlessly aggravated, to the disadvantage of the native- 
born taxpaying public, by tlie absorption of this mass of foreigners, 
towards whom it is entirely unnecessary to exercise any considera- 
tion whatsoever. They do no honest work, they pay no taxes, 
they evade every form of control; on the other hand they seize 
every chance to circumvent German laws and damage, or even 
destroy, German propei-ty. It is entirely unnecessary to exercise 
any consideration whatsoever towards such people. Rather it is 
more than ever urgent that, until they can be shipped back to 
their own country, they should be accommodated in internment 
camps or, even better, rendered harmless . . . 

This report by Berlin’s Chief of Police distinctly foreshadows 
an era which can certainly not be described as anti-Semitic: the 
era of political unrest that reached Western Europe by way of these 
Eastern Jewish immigrants and created a scandal among the 
citizens of other countries besides Germany. 



CHAPTER TWENTY-ONE 

With the Danathank 


S OON after I joined the Nationalbank fiir Deutschland one 
of my fellow members, as already mentioned, was obliged 
to resign from the board which now consisted only of my 
colleague Wittenberg and myself. Wittenberg handled the current 
business while I was entrusted with the larger credit and joint 
stock transactions. We were short of a manager for the entire 
Securities Department and it therefore became necessary to 
appoint a third member of the board. On the urgent recommenda- 
tion of some members of my Supervisory Council I allowed myself 
to be persuaded into inviting Herr Jacob Goldschmidt, a partner 
in the banldng firm of Schwarz, Goldschmidt & Co., to join the 
board of the Nationalbank. Schwarz, Goldschmidt & Co. was one 
of the most active firms in the securities markets and their senior 
partner, Goldschmidt, was reckoned one of the most capable men 
on ’Change. He joined the board of the Nationalbanlc in Ae middle 
of 1918 and during the ensuing decade developed into one of the 
most pronainent figures on the Berlin Stock Exchange and one of 
the most discussed members of Berlin’s banking business. 

It soon transpired that Goldschmidt and I differed completely 
in temperament and, unfortunately, also in our attitude to banking 
policy. Although we were outwardly on good terms, I very much 
disliked his speculative methods. Within a very short time he 
started to acquire securities amounting to considerable sums on the 
bank’s account which resulted sometimes in gains, sometimes in 
losses. His strong suit was to gain a footing in most of the big 
limited companies by means of these parcels of securities and there- 
by obtain their custom for the bank. He would likewise instigate 
and carry through amalgamations and other combines among the 
big companies, all of which, it is true, greatly enhanced the impor- 
tance of die Nationalbank and brought plenty of new business, but 
which on the other hand made excesbive demands on the bank’s 
rebources. Incidentally, he overlooked the fact that these same 
resources consisted not only of the bank’s own capital, but even 
more of customers’ deposits, 

Goldsclunidt always inclined more to bulls than to bears; a 
conunon failing among speculators. Bulls are those who count 



172 


My First Seventy-Six Years 


on a rise in prices, bears or “fixers” those who expect a fall. 
Doubtless it is inherent in human nature to be governed to a greater 
extent by optimism than by pessimism. 

The first major set-back occurred with the military collapse 
towards the end of 1918. It became apparent that Goldschmidt’s 
speculative activity' — ^when it went agley — was accompanied by 
considerable “jumpiness”. Even at that time 1 had to help him 
pull himself together in face of these disappointments. 

“For heaven’s sake, Goldschmidt,” I exhorted him, “keep 
calm. Situations like the present one can be successfully tackled 
only with Aryan doggedness, not with Jewish fussiness,” And 
indeed we made quite a good recovery from the first fall in 
prices, thanks to this same Aryan doggedness. The beginning of 
devaluation soon sent the price of securities rocketing again. 

It soon became evident, however, that the need to extend the 
foundations of the Nationalbank was urgent. As a result, Gold- 
schmidt negotiated the amalgamation of our Hank with the 
Deutsche Nationalbank in Bremen, which meant a corresponding 
increase of capital and the adoption of the branch system. 

Aided by the continued progress of devaluation, Goldschmidt, 
in the course of the ensuing years, succeeded in appreciably 
extending our connections with the big industrial and trans- 
port concerns. Once again, however, the discrepancy between 
the level of securities commitments and the capital available 
very soon became apparent, and in 1921, therefore, Goldschmidt 
achieved a new amalgamation, this time with the Darmstadter 
Banlc, 

I was not at all enthusiastic over this amalgamation because the 
consequent extension of the money basis might prove an induce- 
ment to Goldschmidt to continue his speculative banldng policy. 
My attitude to banking was governed first and foremost by a sense 
of responsibility for the safeguarding of customers’ deposits and 
for the conduct of normal credit and securities business on behalf 


of our customers ; but not for engaging on one’s own account in 
speculations involving considerable risks. Nevertheless, the big 
transactions negotiated by Goldschmidt, whidi at that time 
naturally made big profits, secured for him the full support of the 
supervisory board, some members of which were glad to participate 
in Goldschmidt’s activities. 

I remember a meeting of the board at which Goldschmidt 
presented one of his big deals, supported by one of the members 
who wondered, in tones of admiration, why anyone troubled 
themselves over all the small transactions when it was only big 
ones such as this that achieved big profits. I had frequently 



With the Danatbmk 173 

issued warnings against speculative banking policy. During a 
pause in the conversation, therefore, I arose and quoted ; 

“‘When no single voice re-echoes in support of one defeated, 
then will I for Hector witness . . ”* 'i^ere would you be, 

gentlemen, with your big deals if it were not for the deposits of 
our many small customers whose money alone makes the financ- 
ing of such big deals possible? The first duty of a bank, in my 
opinion, is to ensure the safety of the deposits for which the bank 
is responsible.” 

In view of our straitened situation I could not oppose the amal- 
gamation with the Darmstadter Bank, but I no longer took any 
pleasure in management. This state of affairs contributed largely 
to the fact that when two years later I left the bank I did so without 
regret. Since the amalgamation the establishment was known 
as the Danatbank, and subsequent developments unfortunately 
proved that I had been right. The bank crisis of 1931 was brought 
about by the collapse of the Danatbank under the direction of 
Jacob Goldschmidt, when the bank was no longer in a position to 
repay their customers’ deposits on demand. 

I had frequently to blame Goldschmidt for his failure to grasp 
the duties of one of the major deposit banks and the correspond- 
ing responsibility vis-d~vis the depositors. On the other hand due 
allowance must be made for his gift for achieving financial Korn- 
Unationen. Unfortunately he was unable to keep within bounds or 
preserve the right balance between the end ^d the meai^. This 
trait was the more regrettable as Goldschmidt was in himself a 
charming personality, heart and soul devoted to the cause of 
Germany’s economic recovery. 

Goldschmidt was not popular with his colleagues in the other 
big banks, not only on account of his competitive methods, which 
occasionally verged on ruthlessness, but also because his whole 
outlook did not fit in with that of responsible big bank leadership. 
This was brought home to him very forcibly when his bank was 
faced with the crisis of July I93i» aiid none of his colleagues stood 

surety for him or came to his assistance. 

I think I can claim to have described Goldschmidt sine ita et 
studio^ and may therefore be allowed to quote ihe parody of an 
extract from the Prologue to Schiller’s Wallenstein which went the 
rounds after Goldschmidt’s departure: 

“You know him well, the author of keen quotations. 

Idol of ‘bulls’ and scourge of ‘bearish’ gamblers, 

* " Wenn des lAedes Stimmen schtveigen von dem Hhermmdnen Mam, so 
toillichfUr Hektom neugen . . .” . 



174 


My First Seventy-Six Years 

Dame Fortune’s bold and enterprising son 
Who, on inflation’s pinions borne aloft, 

Swiftly attained the highest peak on ’Change, 

And, still insatiably bent on speculation. 

Fell victim to that all-consuming craze.” 

The less pleasure I got out of my work in the Danatbank the 
more I turned my attention to public economic questions. Next to 
problems of monetary policy I was most deeply concerned with 
the question of reparations. The enormous costs incurred by the 
First World War — ^in contrast to earlier wars — ^may well have been 
the reason for the astronomical figures at which the Allies assessed 
payment of war damages. The first sum published amounted to 
four hundred and fifty milliard marks and originated vvith the 
French Finance Minister, M. Klotz, In Paris, at the end of January 
1921, about half that total had been decided upon. It was to be 
paid yearly, beginning at the rate of two milliards and increasing 
to six milliards annu^ly over a period of forty years. 

There followed lively discussions with Germany, and at inter- 
national conferences, as to the final amount of reparations to be 
determined upon. Today everyone is agreed that the reparations 
demands made absolute nonsense from the standpoint of political 
economy. At that time, however, the politicians responsible had 
no real idea how such demands could be met, nor of their eventual 
economic repercussions. 

As early as iqzi I took the opportunity during a first post-war 
visit to Paris, to ventilate the reparations question — ^in particular 
the possibility of their economic implementation — ^with certain 
members of the French Government whom I managed to contact, 
among them the Finance Minister M. de Lasteyrie ; but without 
achieving any result. The reparations were finally fixed at one 
hundred and twenty milliards. 

The development of inflation in Germany, and the Allies’ costly 
occupation of the Rhineland, had made it abundantly clear how 
little could be expected as regards payment of such fantastic 
reparations. Shortly afterwards, in May 1923 , 1 had the chance of 
discussing reparations problems in London with the representa- 
tives of a British industrial combine, the Commonwealth Union, 
under the leadership of a lawyer named Allan Smith. His deputy, 
engaged in the electrical indxistry, was of German origin and had 
elmged his name of Hirsch to Hirst, Here too I was up against a 
general dislike of Germany ; nevertheless the discussions were con- 
ducted on a basis of great impartiality and personal courtesy. 

All those present appeared to agree as to the desirability of 



With the Danatbank 175 

reviving Anglo-German trade. Certain political questions, such as 
the joint guarantee of the Eastern frontiers laid down at Versailles, 
the internationalization of the Rhine railways, the occupation of 
the Rhineland, etc., were quickly dropped as being either unprofit- 
able or politically detrimental ; the main theme of the discussion was 
the level of reparations. The German Government had indicated 
a maximum of twenty milliard marks as being all that Germany 
could afford. 

“Twenty milliard marks is much too little,” declared one of 
those present, “that’s not a fair offer,” 

“It may seem little to you, gentlemen,” I said, “but at any rate 
it is fair. We have no wish to embark on a policy of dishonesty. It is 
precisely because we are willing to pay that we mention a sum which 
we assume we shall be able to pay. It would be easy enough today to 
suggest a higher amount if we base this suggestion on the premise 
that later the impossibility of such payments will become evident, 
and if we do not shrink from the accusation that we had given a 
promise which we were unable to fulfil.” 

My explanations made a distinct impression; nevertheless the 
participants were neither willing nor empowered to agree. On the 
contrary they raised fresh objections. 

“The German policy of taxation is too lenient,” was the opinion. 
“The directors put everything into their businesses instead of 
paying taxes.” 

“You arc aware, gentlemen, that we are suffering from the most 
frightful inflation. In the face of a daily diminishing monetary 
value, no definite policy of taxation is possible. So long as we have 
not succeeded in re-establishing a stable currency there is no 
prospect of being able to calculate our revenue from taxation on a 
workable basis, still less of being in a position to pay reparations. 
As regards the financing of businesses from their own resources, 
surely we must all rejoice if our industry — ^rendered backward and 
out-of-date by the war — can be set on its feet again. Without this 
industry there is no hope either for German exports or for payment 
of reparations.” 

On the afternoon of that first day I met Mr. McKenna, one of 
the cleverest of leading British bankers, and a former Chancellor 
of the Exchequer. When I told him of the morning’s discussion he 
smiled thoughtfully; “The German proposal of twenty milliard 
marks is far too high. Since Germany can only make payments by 
means of exports, she would be compelled to export to such an 
extent that British industry would suffer intolerably.” 

Among Allied econonaists McKenna was probably the first to 
recognize the so-called “transfer problem” which has governed all 



176 My First Seventy- Six Years 

reparations and economic action during the past decades. It is very 
easy to decree, on paper, that one countiy shall pay milliards to 
another. On the one hand this problem affects the debtor country 
inasmuch as it must raise the amount of the debt by taxation and 
labour. On the other hand it also affects the creditor countries, 
since payment cannot be made in the currency of the debtor 
country (in Germany’s case in Reichsmarks) but can only be 
accepted in gold or in goods. German marlts can be spent only in 
Germany; but to export German goods in such vast quantities 
means severe competition for the other countries. 

My visit to England ended the following day with a luncheon 
given in my honour at the Royal Automobile Club — a sign, at any 
rate, that my presence and my explanations had met with appreci- 
ation and understanding. Those in Allied circles were beginning to 
realize the need to debate the question of reparations from an 
unbiassed economic viewpoint as well as the necessity for restoring 
order in German currency. Government negotiations in the ensu- 
ing months resolved themselves in a decision to call an Economic 
Conference to discuss these questions. It met in 1924 in Paris 
under the chairmanship of the Chicago banker Charles Dawes, 
and is known to liistmy as the Dawes Conference. 



CHAPTER TWENTY-TWO 


The Secret of the Stabilized Mark 

I N the summer of 1933 the inflation in Germany, with its 
attendant misery, reached its climax. Five years after the end 
of World War I found Germany in the grip of a fever that 
threatened to undermine her last vestige of strength. In Saxony, 
Thuringia and Bavaria riots broke out everywhere. Hitler was 
tub-thumping in the south. The Communist-Social-Democratic 
Zeigner Government in Saxony gave the Red terror a free hand. In 
Hamburg street fights raged all day and fifteen policemen and sixty- 
five civilians were killed. The danger of a Communist upheaval 
was imminent. 

I felt it my duty to evacuate my family from this helTs kitchen 
and pack them off to Switzerland so that I myself might not be 
hindered by personal considerations were I to be drawn into the 
whirlpool. From my window in the Danatbank on the Schinkel- 
platz, quite near the Schloss, I had a wonderful view of the Church 
of Our Lady. But even the most peaceful view could not gloss 
over the fact that we were living on the edge of a volcano. So 
I offered my two children the chance of perfecting their know- 
ledge of French. My thirteen-year-old boy was sent to school in 
Lausanne and my twenty-year-old daughter interrupted her studies 
in Heidelberg to attend Lausanne University. 

Everyone was agreed that the Communist peril could be averted 
provided the fight against the French occupation of the Ruhr 
were ended (this being the principal cause of the rapid inflationary 
progress), and a stabilized currenqr established. For three years 
the most widely different plans for stabilization had been under 
discussion without coming to any definite decision. The Strese- 
mann Cabinet finally resolved to put an end to the Ruhr dispute and 
concentrate on an attempt to stablilize the national currency. 

Stresemann’s political merit in this late summer of 1923 cannot 
be overestimated. He wasted no time on theoretical propositions. 
His aim was to create such a position in internal affairs as would 
ensure a sufficient majority in favour of stabilization. Furthermore 
he succeeded in enlisting Allied interest and co-operation to 
establish qrder in German financial and economic affairs. This 
co-operation led to the convening of the group of international 



1^8 My First Seventy- Six Years 

experts which met in January 1934 and has become famous tinder 
the title of the Dawes Committee. 

Success depended on the ability to achieve a union of right and 
left in a joint monetary policy. In this connection the political 
Right, which had particularly strong lies with agriculture, played 
an outstanding part. 

Agriculture had so far derived considerable benefit from the 
inflation in so far as the latter had enabled farmers to repay their 
debts with the debased currency, because the German law supports 
the principle that mark equals mark. This meant that debts which 
had been incurred in gold marks could be paid by means of equal 
nominal amounts in debased paper marks. In addition, the agri- 
cultural community used their paper marks to purchase as quickly 
as possible all kinds of useful machinery and furniture — and many 
useless things as well. That was the period in which grand and 
upright pianos were to be found in the most unmusical households. 

The agricultural circles felt themselves to be masters of the 
political situation, though, from a political point of view, they were 
no friends of Stresemann whose scat was far removed from them 
on the Liberal benches in the Reichstag. But Stresemann knew how 
to capture them. 

He gave his blessing to a currency plan put forward by the 
Conservative German-Nationalist member Helfferich, a plan 
which provided for a so-called Rogf/enmark (rye-mark). Several 
big undertakings had already conceived and adopted the idea of 
issuing bonds payable not in paper money but in kind, (e.g. a ton 
of coal, a hundredweight of potash, etc.). Helfferich went further: 
he issued tokens for one hundred marks which were payable with 
a certain quantity of rye and remained valid for that quantity. It 
could not, of course, be described as a stable currency for the price 
of rye varied according to consumption and harvest, but the dif- 
ferences in value did keep within the bounds of the highest and 
lowest prices for rye. 

Helfferich endeavoured to exploit the Roggenmark plan to the 
advantage of his party by entrusting the issue of the tokens not to 
the Reichsbank but to a Central Bank Institution shortly to be 
established and whose administrative capacity would be chosen 
for the most part from among agricultural groups. It is easy to 
understand that these groups would have acquired a strong 
influence in German economic ajffairs. 

Naturally the idea met with stormy opposition from the Left, 
After much argument a compromise was reached in the shape of 
the so-called Rentenmark. In theory this Rentenmark was to be 
equal to the gold mark, but would be covered by a cautionary 



The Secret of the StaUliised Mark 179 

mortgage on the whole of German landed property, so that any 
given sum in Rentenmarks could be exchanged at any time for a 
like sum in mortgage bonds. Even this was obviously no guarantee 
for stability of value, for such a mortgage bond would fetch only 
fluctuating prices on the stock exchange. In the meantime some- 
thing had to be done. 

Under pressure of this “must” Stresemann succeeded in obtain- 
ing a two-thirds majority in the Reichstag which gave the Govern- 
ment full power to decide as it saw fit in currency matters. So the 
Renteimiark became law. A special Rentenbank was established; 
but the Reichsbank also came into the picture, for the distribution 
and loaning of Rentenmarks was entrusted to the board of the latter. 
Such was the situation when I was called upon to carry out the 
currency reform in a practical manner. 

On the morning of the i2th November 1923 the Minister of 
Finance, Dr. Luther, summoned me to an urgent consultation. 
Dr. Luther was an absolutely first-rate executive. Before he took 
over the Finance Ministry he had been Lord Mayor of Essen 
and had discharged his duties in exemplary fashion. He was like- 
wise fully equal to his post at the Ministry of Finance, but did not 
feel able to cope with the task of reforming the national currency 
and looked about for a specialist in that line. 

Now in attendance on the board was a certain very stout 
commissionaire, one Miissigbrodt* by name, who nevertheless, 
on account of his zeal and activity, had earned for himself the 
secret nickname of “old busybody”. Feeling that he must do 
something to help me, he asked: “Will you not be requiring your 
red case, sir?” 

The “red case” was a leather portfolio which accompanied me 
on all my journeys and to all conferences. It contained whatever 
documents and other papers I might be needing at the time. On 
this occasion, however, I did not require it, I shook my head, “No 
thanks, Miissigbrodt, no red case today.” 

I was not altogether unprepared for this discussion with the, 
Finance Minister, I knew that two other members of the banking 
profession had already been approached with the request that they 
should take over the attempt at currency reform as Conunissioners 
of National Currency. Both had declined. So I had a pretty good 
idea of what Luther was aiming at. 

Luther very briefly laid his suggestion before me. My first 
question was: “Herr Luther, why don’t you undertme it 

• Translator’s note: A singularly inappropriate appellation: it means 
“bread of idleness” I 



jgo Seventy- Six Years 

yourself?” He gave his reason, namely that he was already over- 
worked. 

‘‘Why did the two other bankers, whom you approached first, 
refuse?” 

‘‘They probably did not feel equal to it. Indeed one of them was 
naive enough to say he would take on the job after the introduction 
of the Rententnark. But that is to miss the point completely. It is 
this very introduction that is of vital importance.” 

‘‘Why don’t you let the Reichsbank carry out the currency 
reform?” 

‘ ‘ You know well enough, Herr Schacht, that the President of the 
Reichsbank, who in himself would be quite capable of tackling the 
business, is not on very good terms with the Government or the 
President of the Reich.” 

I certainly did know it. The Government, and likewise President 
Ebert, had more than once given Havenstein to understand that 
he should retire. But Havenstein held a life appointment, and before 
he did retire he probably wanted, among other things, to make sure 
that his successor would be someone who held the same views on 
currency questions as he did. It was no secret that he wished Herr 
Helfferich to succeed him. But the appointment rested with the 
President of the Reich and Helfferich was not the man to whom the 
Government, or Ebert himself, would have given their confidence. 

I considered the matter. Although, in principle, I was prepared 
to switch over from the private to the public service of the national 
economy I was aware that I looked upon the Rentenmark solely in 
the light of an emergency measure to be superseded as soon as 
possible. For me the only real solution was tlie reinstatement of the 
gold mark; and this could never be done through the Rentcnbank 
but must be accomplished by the Reichsbank. 

"I would ask for a few days in which to think over the matter 
thoroughly.” 

“I regret most sincerely that that is utterly impossible. You will 
have to decide today and take over the duties of Commissioner for 
National Economy immediately,” 

“What authority does the post carry?” 

Luther explained. I should have a free hand in all matters 
touching the question of money and credit, and would be in direct 
contact with the Government, by-passing the various Ministries. 

“ Would you agree, Herr Luther, to my informing you of my 
decision this afternoon? I shall have to come to some arrangement 
with my colleagues and my bank.” 

“If you accept by this afternoon I shall be quite satisfied.” 

I went back to the bank, thought oyer my plans and told my 



The Secret of tfie Stabilhed Mark i8i 

colleagues that I intended to accept the Government post if the 
bank would release me from my agreement. They could not very 
well dissuade me, for it would have been difficult for the bank as 
such to oppose the Government offer. It is also possible that among 
my colleagues were one or two who did not object to my departure. 
No public man can ever hope to escape traducers, and in my case 
the usual scandalmongers came out later with a tale of a large sum 
which the bank was supposed to have paid me by way of compensa- 
tion. The truth is that at no time did I stipulate for, or receive, 
any compensation whatever. 

At the same time as I left the bank I also resigned all my advisory 
positions. It was the custom for all banks to strengthen the relation- 
ships between their directorate and their clientele (where the latter 
consisted' of joint stock companies) by the co-opting of leading 
bankers on to the companies’ advisory boards. Their first duty was 
to cultivate credit and financial relations with these establishments 
and also to advise them. With the passage of years it had become 
usual to represent these advisory posts as remunerative sinecures. 
But, apart from the fact that the reimbursements attached to these 
positions were not always paid to individual bank officials but 
were remitted to the banlc as a whole, these jobs were by no means 
exempt from work and anxiety. It was not possible to leave such 
duties to subordinate members of the staff since they nearly always 
involved responsible and immediate decisions, and the result was a 
big increase in the number of advisory posts undertaken by leading 
bankers. I myself, in the course of years, had achieved a total of 
about seventy. According to my secretary’s evidence, I spent no 
fewer than one hundred nights in the train in one year in order to 
fulfil my advisory engagements — ^which may give some idea of the 
work entailed. 

Next morning, the 13th November 1923, I entered upon my 
duties as Commissioner for National Currency. Curiously enough, 
the number tl^irteen has frequently played a part in my life. On Sie 
13th March 1924 I founded the Golddiskontbank. The 13th May 
1927 was “Black Friday’’ on the Berlin Stock Exchange. On the 
13th January 1931 I arrived at Scheveningen for The Hague 
Conference. On the 13th July 1931 Chancellor Briining summoned 
me to a consultation on the bank crisis. The 13th November 1923 
was also the day on which Stresemann finally succeeded in getting 
a law passed investing him with full authority, with the aid of 
which he suppressed the various attempts at insurrection and 
rioting throughout the country. 

Four days previously, i.e. on the evening of the 9th November, 
I had been sitting drinkmg beer with Stresemann whom I had 



My First Seventy-Six Years 

known for twenty years, and discussing the economic situation 
with him. Our conversation had been suddenly interrupted by a 
report from the Foreign Office informing Strescmann of Hitler’s 
attempt at a National-Socialist Putsch in Munich. 

Up till this i2th November, when I burned my boats, I had been 
very happy in my private life. I had my family, my groups of 
friends, a decent income, a comfortable home; I could share my 
business anxieties with equally responsible colleagues. In short, 
had I not been driven by the urge to help my country I should 
probably have ended my life in comparative peace and comfort. 
But I was never able to rid myself of anxiety for the welfare of my 
people. I never considered my banking career in the light of a 
money-making business ; rather I desired to use my activities as a 
banker in order to help German economy. I realized that Germany 
was in danger of succumbing to Communism and felt it was my 
duty not to shirk a task which, as I hoped, lay within my power to 
fulfil. 

Since my wife was in Lausanne I was not able to talk things over 
with her : all I could do was to acquaint her with my decision, which 
meant that I also had to do without her advice. A lonely road lay 
before me. Politics claimed me, whether I would or no, without 
the backing of any one political party. True, I was still a member 
of the German Democratic Party, but I had never felt warmly 
attracted to it. Nothing was further from my mind than to allow 
my views and convictions to be influenced by party considerations. 
So far as politics were concerned, it was obvious that I should 
emain a “cat that walked by himself”. My work was political 
economy; but political economy changes with the passage of time 
and does not accommodate itself to party-political ideas. 

My change of work meant also a complete change of social 
surroundings. The one person who made titis change with me was 
my trusty secretary, Fraulein Steffeck. Her knowledge of English 
was perfect, as the result of many years’ residence in South Africa; 
she was better at typewriting thra at shorthand, but had a real 
aptitude for organization, was most discreet and displayed great 
tact in dealing with people. My office from now on was situated in 
the Ministry of Finance, and her transfer to that Ministry gave 
rise to some difficulties, as was evident from my conversation with 
the head of the Personnel Department. "lam bringing my secre- 
tary with me,” I began. “Where can you fit her in — mean as 
regards salary scale ? ” 

“The salary scale for our secretaries is two hundred marks per 
month.” 

“That seems to me much too little; when FrUulein Steffeck 



The Secret of the Stabilized Mark 183 

was with us in the bank she drew six hundred marks a month. 
What is the salary of the Commissioner for National Currency?” 

“Four hundred marks per month have been allotted as the 
salary of the Commissioner for National Currency.” 

“That is rather small compared with my income up to now. 
But I will make you a suggestion; Add my salary to FrSulein 
Steffeck’s ; then she will still have her six hundred marks. For my 
part I will waive my claim to a salary.” 

“Do you mean you will work here for nothing?” The official 
was obviously disconcerted. 

“Yes — on condition that you pay my secretary six hundred 
marks.” 

My office in the Ministry of Finance consisted of one small room 
looking on to the back-yard which had hitherto been used by the 
charwomen as a sort of housemaid’s cupboard. But at any rate 
there was a writing-table and a telephone. So I refused to be upset 
by it, and told myself that there were millions of people worse off 
than I. 

Ten days after my appointment as Commissioner for National 
Currency the Stresemaim Government fell, and its place was taken 
by the Marx Cabinet. It made no difference to my position. Marx 
was certainly not a man of outstanding energy, but he was, on the 
other hand, a man of invariable kindness of heart and unswerving 
rectitude. Throughout the struggles of the next few months he 
gave me his discreet but unreserved support. 

A few days elapsed before the necessary Rentenmark notes were 
printed. In the meantime the devaluation of the paper mark pro- 
gressed rapidly. All previous efforts to establish a fixed price for 
tire dollar on ’Change had failed. For weeks on end only a per- 
centage of the foreign currencies bespoken by business circles could 
be covered, and then at the rate momentarily fixed by the Reichs- 
bank. Against this, however, all foreign currencies, particularly 
the dollar, fetched far higher prices in black-market dealings. The 
Reichsbanlc had no choice but to participate in this increase for the 
first few days. On the 20th November 1923 the official rate was 
four billion two thousand million marks (4,002,000,000,000) for 
one dollar. 

It is to the credit of the late Gehemrat Kaufmann, a member of 
the Board of the Reichsbank and their determining voice on ffie 
stock exchange, that he made the request that this rate be main- 
tained. He may possibly have been influenced by the consideration 
that the peaicetime rate for the dollar had been 4.2 marks. If, 
therefore, it was desired to transpose the paper mark to the old 
gold mark basis it was only necessary to leave out the billion sign 



My First Seventy- Six Years 

which made the transposition in bookkeeping amazingly simpler. 
Every odd-numbered amount would have meant unending work 
when it came to conversion. 

The bank-books were filled with noughts, which gave rise to 
many a joke, the most pungent of which was attributed to Karl 
Fiirstenberg. He once asked an acquaintance why the Diskonto- 
gesellschaft had added two storeys to their building and was told 
it was because of all the noughts which required more and more 
space. Whereupon Fiirstenberg is supposed to have retorted: “I 
always assumed that the noughts in the Diskontogesellschaft were 
housed on the first floor.” The board rooms were on that floor. 

The official rate on ’Change remained at four billion, two 
hundred thousand million, while during the last week in November 
the dollar fetched up to twelve billion marks in the black market. 

In the course of those November weeks Germany was in a 
curious position with three separate currencies, so to speak, 
existing side by side — ^the paper mark, the Rentenmark and — 
theoretically — ^the old gold mark, which it was my aim to reintro- 
duce in practice through the Reichsbank. 

Two enemies of stablilization remained to be defeated — the 
black market and the Emergency Notes issued by many public 
corporations and private businesses. These Emergency Notes were 
on an equal footing with the paper mark, and so long as the former 
could be paid in to the Reichsbank stabilization was not possible. 
In this instance there was no question of the Reichsbank exercising 
control over money that was issued : the Emergency Notes were 
foisted upon it from outside. The time had come to put an end to 
the system, “Everyone his own Reichsbank.” 

The first step taken by the Reichsbank was to announce that 
from now on no more in-payments of Emergency Notes would be 
accepted. This meant that tWe was no reason for the corporations 
and businesses concerned to issue any more Emergency Notes, 
For such notes, if no longer accepted by the Reichsbank and no 
longer on the same footing as the paper mark but based solely on 
the credit of the issuing firms or municipalities, would no longer 
be accepted by anyone. 

This decision on the part of the Reichsbank aroused a veritable 
storm of indignation among all those groups to whom the emerg- 
en^ issues had spelt such wonderful profits. The reason for 
this indignation, especially in the industrial districts of Rhineland- 
Westphalia, lay partly in annoyance at the knowledge that profits 
from the Emergency Notes would henceforth steadily diminish, 
partly also in the embarrassment experienced in particular by 



The Secret of the Stabilised Mark 185 

certain municipalities who had placed orders and undertaken 
investments, expecting to be able to pay in Emergency Notes. But 
by now it was no longer a question of advantages or ^aadvantages 
to this or that interested party, but of the stabilization of money for 
the whole country. 

A discussion with representatives of the Reichsbanli was arranged 
to take place in the town hall at Cologne on the 25th November 
1933, sponsored by leading mtmicipal and business groups and 
under the direction of the Lord Mayor of Cologne. I took part 
in this meeting in my capacity of Commissioner for National 
Currency. It is easy to imagine the tension with which not only 
the groups involved, but the public as a whole, looked forward to 
the results of this discussion. 

For a good three hours on end one speaker after another 
addressed the meeting. Each of them had only one request, 
namely, the reacceptance of Emergency Notes by the Reichsbank. 
It was a tremendous disappointment to me that not a single voice 
was raised which either understood or admitted that reacceptance 
of Emergency Notes would mean the complete fiasco of any attempt 
to stabilize currency. Indeed, every speech was characterized by 
absolute distrust of the success of that scheme. It proved yet 
again, not that a big meeting is incapable of understanding a given 
situation but that it can never result in a decision to act. Had it 
been possible to discuss the matter with each individual separately 
one or other among them might perhaps have been won over. But 
at a mass meeting every vestige of comprehension was doomed. 

A veritable storm of supplications, appeals and threats beat 
upon my nerves like hailstones without making the slightest 
impression on me. I allowed all the speakers to proceed without a 
single interruption. Finally, however, I rose to my feet and said: 
“Gentlemen, for the past three hours you have been doing your 
best to talk me round. I am quite willing to adroit that the stopping 
of Emergency Notes will mean unpleasantness, embarrassment, 
even considerable difficulties for you. Nevertheless none of your 
arguments carries weight against the need to restore German 
currency to its position as a stable currency. I regret that so many 
among you have voiced doubts as to whether the stabilization of the 
mark would be successful. To that I reply that the stabilization of 
the mark will be successfully carried out, irrespective of whether 
difficulties may arise in individual cases. The great mass of Ger- 
man working folk must be able once again — ^thanks to a stable 
currency — ^to feel the ground firm under their feet. Consequently, 
I will now bring this discussion to a dose with the irrevocable 
dedaration that the Rdchsbank will adhere to its decision to 

7 



1 86 Seventy-Six Years 

refuse Emergency Notes. You will have once more to accustom 
yourselves to budgeting with fixed figures.” 

Such action did nothing at first to increase my popularity. But 
neither had my respect increased for the general economic and 
political attitude of those present. My satisfaction lay in the fact 
that the stabilization of the mark was successful and that these same 
groups who, on that November afternoon, had attacked and 
rejected me were obliged, in a few months, to admit that I had 
gone the right way to work. 

The second decisive blow to be struck was aimed at the black- 
market traffic in foreign exchanges. 

The success of this blow was due mainly to the fact that although 
the Rentenmark was introduced as a legal measure, it did not 
receive the status of legal tender and the distribution of Renien- 
mark loans was made through the Reichsbank, not through the 
Rentenbank. These were the two angles from which the Reichsbank 
was able to reaffirm and develop its function of sole responsibility 
for monetary policy. 

The expression “legal tender” implies the right of eveiy person 
to settle his debts with this money, and the obligation of every 
creditor to accept the same in payment. If the Rentenmark did not 
possess this qualification, nobody could be compelled to accept the 
Rentenmark as legal tender. 

Curiously enough, the gamblers in foreign exchanges had over- 
looked this characteristic of the Rentenmark. The buying and selling 
of foreign bills of exchange, particularly the dollar, was carried on 
for the most part by so-called time-bargains. The purchase agree- 
ment was concluded at the day’s ruling price, while the payment 
was completed only at the end of the month, the so-called ‘ ‘ ultimo .’ ’ 
By the November “ultimo” the black-market dollar rate had risen 
to exactly twelve billion marks for one dollar. It now transpired 
that many of the gamblers in foreign exchanges had not sufficient 
money to meet their commitments for the November “ultimo.” 
The Reichsbank was swamped with demands for credit which had 
formerly been honoured without any trouble. Now, however, the 
Reichsbank refused to grant credit to the speculators. Nevertheless 
it announced its willingness to buy every foreign bill, but only at 
the official price of four billion two hundred million marks to the 
dollar, as fixed at the 20th November. For many speculators there 
was nothing for it but to sell their foreign bills back to the Reichs- 
bank so that whoever had bought dollars at the rate of four 
billion two hundred million marks was obliged to surrender them 
to the Reichsbank with the same amount. Which meant that they 
lost tight billion marks on every dollar I 



The Secret of the Stabilised Mark 187 

This “bloodletting’' gave the gamblers such a shock that a fresh 
large-scale speculation in foreign exchange against the official 
Reichsbank rate was not to be expected for some time to come. 
With the defeat of the foreign-exchange speculators and the stop- 
ping of emergency notes the first round in the battle for stabilized 
currency had been won. But I knew that fresh struggles would 
follow. 

Among the many communications I received in my official 
capacity a considerable proportion consisted of requests for em- 
ployment in my department. Everyone had expected that with the 
establishment of a Commissioner for National Currency there 
would arise a new, comprehensive authority. I have never engaged 
a single employee or official. My secretary was and remained my 
sole assistant. Later, she was occasionally asked by reporters how 
I had carried on my activities as Commissioner for National 
Currency. To one of these questioners Fraulein Steffeck replied: 

“What did he do? He sat on his chair and smoked in his little 
dark room at the Ministry of Finance, which still smelled of old 
floorcloths. Did he read letters? No, he read no letters. Did he 
write letters ? No, he wrote no letters. He telephoned a great deal — 
he telephoned in every direction and to every German or foreign 
place that had anything to do with money and foreign exchange as 
well as with the Reichsbank and the Finance Minister. And he 
smoked. We did not eat much during that time. We usually went 
home late, often by the last suburban tr^n, travelling third class. 
Apart from that he did nothing.” 



CHAPTER TWENTY-THREE 


President of the Reichshank 

I F the 20th November constituted a milestone in the history of 
the stabilization of the mark by the fixing of the dollar rate at 
four billion two hundred million paper marks, it also brought 
yet another fateful occurrence. On that same day Havenstein, 
President of the Reichsbank, died quite unexpectedly. For the 
past few days he had been off colour but had not appeared to be 
seriously ill. He was usually hale and hearty and no one had 
dreamed that he would pass away so soon. 

The question of his successor had for some time been smoulder- 
ing in people’s minds; now, with his death, it became acute. 

As so frequently happens in a parliamentary democracy, the 
selection of an expert specialist was strongly influenced by political 
considerations. Havenstein was well known as an old type of 
official with conservative tendencies. He had always refused to 
take the initiative in putting an end to inflation. He had not acceded 
to the Goveriunent’s desire that he should resign of his own accord. 
His own wish was that his successor should be a man of the same 
conservative trend as himself. 

The discussion as to Flavenstein’s successor concentrated essen- 
tially on two individuals. One was Karl Helffcrichi bank manager 
and representative of the Deutschnationale Partei (German National 
Party) in the Reichstag. The other was Hjalmar Schacht, Com- 
missioner for National Currency and joint founder of the Deutsche 
Demokratische Partei (German Democratic Party). From the 
technical viewpoint Helfferich’s former career as a professor was 
in his favour, coupled with the fact that he had written several 
scientific books and articles on the monetary system. Schacht had 
to his credit his recent immediate monetary success as Commis- 
sioner for National Currency, Both men could look back on a 
professional banking career. 

At first I took no part in the discussions on the subject of 
Havenstein’s successor. I had previously expressed the view 
that to have a Commissioner for National Currency as w^l as the 
President of the Reichsbanlc was an unnecessary nuisance and in 
the present situation I declared that I would willingly see the 
former office transferred to the new President of the Reichsbank. 



president of the JReichsbank 189 

But when criticism reached the point of personal abuse I gave 
tongue. 

The board of directors of the Reichsbank, as a body, was en- 
titled to express its expert opinion on the candidates for the 
Presidency of the Bank. They had long been aware of the late 
President’s wishes in this respect and, as was only natural, they 
desired to give effect to these wishes by appointing Helfferich. 
Nevertheless for some unknown reason they allowed themselves 
to be misled into casting aspersions on my personal reliability in 
reference to the passage of arms I had had with Herr von Lumm 
in Belgium in 1915. The Brussels incident was not of course venti- 
lated franldy and impartially but was the subject of disparaging 
hints and innuendoes. Fortunately, however, Stresemann in his 
official capacity as Chancellor had, at my request, caused the 
Brussels ^air to be thoroughly investigated weeks before my 
appointment as Commissioner for National Currency, and I 
could point to his letter as a complete vindication. So that little 
intrigue failed in its purpose and my candidature went forward. 

A conference to which I was bidden by President Ebert may 
possibly have served to turn the scale. Hitherto I had been only 
slightly acquainted with Ebert. Now the opportunity presented 
itself for a fairly long discussion on political economy during 
which I realized with great pleasure how little this man was bound 
by party-political prejudice. 

“You know, of course, Herr Schacht, that professionally 
spealdng we cannot regard Herr Helfferich as less well qualified 
than yourself. On the other hand it is very natural that we should 
accord preference to a man whose general outlook tends essentially 
more to the Left than in Helfferich’s case.” 

“lam most grateful, sir, for your good opinion. Unfortunately 
I must confess that, although I take my stand as a broadminded 
Liberal, I am not in any sense a Social-Democrat. From the stand- 
point of economic policy I am all against exaggerated State bureau- 
cracy and I expect an improvement in our economic situation 
first and foremost from the unhampered development of private 
enterprise,” 

Ebert brushed ray objections aside. “In my opinion, whether 
you are a Social-Democrat or not has nothing whatever to do with 
the present case, nor whether from an economic view you incline 
more to Socialism or liberalism. You have made a successful 
beginning with the stabilization of our currency. But it is only a 
beginning, and it will require further unremitting effort to restore 
our monetary system to a positiori of definite and permanent 
stability, and to keep it so. The question I must therefore put to 



igp My First Seventy-Six Years 

you is this : Do you feel confident that you can carry through this 
work of stabilization to its fipal conclusion ? ” 

I did not hesitate. “I have most carefully considered and ex- 
amined the ways and means of pursuing my stabilization policy. 
I am confident that I can carry through this task to a successful 
conclusion. And you may rest assured that I shall devote all my 
energies and all my knowledge to this end.” 

We shook hands warmly and Ebert terminated the interview 
saying: “Right I You will be hearing from me again.” 

Some fairly heated arguments ensued. The verdict of the 
Reichsbank. board was definitely against me. With three exceptions 
the consultative group of the Reichsbank Central Committee — 
to which about forty prominent members of the business commun- 
ity belonged — expressed themselves unfavourably. But these pro- 
nouncements carried no weight save as professional opinions. The 
decision rested with the Government and the Federal Council and, 
in the last resort, with the President. With only one dissident vote 
— ^that of Bavaria — ^the Federal Council was solidly in my favour 
and on the 2znd December 1923 I received the document, duly 
drawn up, and signed by President Ebert, appointing me to the 
post of President of the Reichsbank for life. 

I had told my wife as little as possible about the preceding 
bickerings and arguments. Now, however, I telephoned the news 
of tny appointment — ^which would once again involve a distinct 
change in our mode of life — and left immediately for Switzerland 
to spend Christmas Eve and Christmas Day with my wife and 
children. 

In our two rooms at the pension we celebrated Cliristmas with 
candles and a Christmas tree; we sang our German Christmas 
songs and read the Christmas Gospel; and if it was not quite the 
same as being at home, being together made it as enjoyable as 
possible. 

We arrived back in Berlin on the 27th December. I had all my 
papers transferred from the “darkroom” at the Finance Ministry 
to bright, airy Presidential offices in the Reichsbank. Then I called 
on the Vice-President, Herr von Glasenapp. I had a question to 
put to him and my subsequent activities would depend upon his 
answer. 

Glasenapp was a Prussian official of the old school with a first- 
rate legal training, of exactly the same type as Havenstein. His 
family ranked among the lesser Pomeranian nobility. He was prob- 
ably better irformed than Havenstein had been on matters of 
moneta^ policy and had won considerable esteem in international 
discussions in which German interests figured. In his dealings 



Presidetii of the Reichsbank igi 

with others he was cheerful and unaffectedly courteous. Though 
somewhat limited by the prejudices of his surroundings he 
was yet sufficiently unbiassed to bow to wiser judgment and 
more valid reasons. He had literary tastes and had been of great 
practical assistance to his eldest son — ^who later became a well- 
known authority on India — ^with his metrical translations from the 
Sanskrit. 

“Herr von Glasenapp,” I began, “I have just dropped in to 
ascertain from you whether the Reichsbank has any plans for the 
definite reintroduction of gold currency, and if so, what they are. 
I assume you are in a position to give me some information on the 
subject.” 

A pleasant, if somewhat embarrassed, smile was followed by 
the statement: “The Bank has no plans or activities in view, 
Herr President,” 

“That is what I thought, Herr von Glasenapp ; in fact I did not 
anticipate any different answer. Nevertheless it compels me to 
postpone taking office for a few days. Before I do so I want to call 
on the Governor of the Bank of England and discuss both the 
German and the international currency situation with him.” 

There followed a lively exchange of telegrams with the German 
Embassy in London. I enquired whether my visit would be 
agreeable to Mr. Montagu Norman, the Governor of the Bank of 
England, and if so when it would be convenient. I was anxious 
that our interview should take place at an early date. The answer 
arrived promptly : I should be very welcome and if possible should 
come immediately. I agreed to start for London on the evening of 
the 30th December. 

Before recounting my first visit to the Bank of England as 
President of the Reichsbank (a visit which was not without 
significant results) I should like briefly to describe the concluding 
stages of my taking over at the Reichsbank. 

On my return from London at the beginning of January I 
called a meeting of the board of directors. “I take this opportun- 
ity, gentlemen, of welcoming you as my colleagues. Today I enter 
upon my duties as President of the Reichsbank, and am aware tlmt 
I do so despite your unanimous desire to the contrary. I entirely 
appreciate your attitude for xmtil now you have scarcely known me. 
For that reason I should also understand it if you preferred not to 
work with me, provided a position of equal status were obtainable 
elsewhere. I will gladly be of assistance to any of you who desire 
to transfer to such a position. On the other hand I, for my part, 
shall bear no resentment on account of your hitherto prevailing 
attitude towards me personally, and shall be happy to see any of 



ig2 My First Seventy-Six Years 

you in the Reichsbank who will continue to co-operate loyally 
with me. I would ask you therefore kindly to let me know by 
tomorrow morning whether you prefer to make a change or are 
willing to work with me. Good morning, gentlemen.” 

Whereupon I retired to my office. Within half an hour Herr 
von Glasenapp appeared with heightened colour to assure me, 
on behalf of all the directors, that they were ready to co-operate 
loyally with me. 

“Thank you for this assurance, Herr von Glassenapp. I realize 
from it the sincere attachment which the members of the board 
entertain for their work at the Reichsbank, and am convinced that 
our work together will develop on lines of cordiality and mutual 
tmst.” 

And in this I was not disappointed. My relations with my 
colleagues on the board became and remained in every respect 
satisfying, confidential and friendly. This was due not only to the 
uprightness of character of all concerned but also to the fact that 
every one of my colleagues was fully equal to his task, which was to 
try each of them severely in the ensuing years. 

The first meeting with the forty members of the Central Com- 
mittee passed off in somewhat lighter vein. According to the 
statutes the board of the Reichsbank was obliged to convene a 
monthly session of the Central Committee. I hadn’t given a 
thought to this regulation when on the morning of 30th January 
my personal assistant brought to my attention the fact that the 
prescribed meeting had not been held that month. 

“Then get busy and call the monthly meeting for tomorrow, 
the 31st. Notify the foreign members by telegram.” 

Next morning every member of the Central Committee was 
present in the great Kaisersaal (Hall of the Emperors) of the Reichs- 
bank — so called because of the three life-size portraits of the three 
Emperors (Wilhelm I, Friedrich III, Wilhelm II) that adorned the 
walls. The room was so planned that for social receptions it could 
be made to coimect with the adjoining Presidential residence. 
At one evening party I was strolling through the Kaisersaal with 
the wife of President Ebert. She glanced with a somewhat surprised 
expression at the paintings and said with a smile as attractive as it 
was significant : “ So you still have the Emperors’ portraits here ! ” 

“But of course ! It is not the duty of the Republic to wipe out 
Germany’s past from the pages of history. But if you will kindly 
turn round you will see the bronze bust of your husband at the 
other end of the room.” 

It was in the Kaisersaal, then, that the members of the Central 
Committee had solemnly gathered when I entered, in my everyday 



President of the Reichsbank igj 

suit. I nodded to several acquaintances, sat down in my chair and 
asked everyone also to be seated. 

“Gentlemen,” I began, “I have the honour to welcome you 
here as your new President. I know, of course, 'that with a few 
honourable exceptions all of you voted against my appointment. 
This fact proved exceedingly useful during my visit to London at 
the beginning of this month, because it enabled other countries 
to recognize that the economic policy hitherto pursued by the 
Reichsbank will undergo a drastic change. You will have the oppor- 
tunity of forming your own opinion of this policy in the course of 
the next few weeks and months. For today it may serve to close the 
meeting, unless one of you has anything to say.” 

The three members who at the time had voted for me grinned 
contentedly when one of my principal opponents, a very well- 
known Berlin banker, asked leave to spei and on behalf of all 
present made the customary apology and declaration and assturance 
of loyalty. I acknowledged them gratefully and brought the meet- 
ing to a close. 



CHAPTER TWENTY-FOUR 


The Bank of England 

ATS o’clock on New Year’s Eve, 1933, my train glided into 
/\ Liverpool Street station. I had arranged with Herr 
Xjl Dufour-Feronce, the Councillor to the German Embassy, 
that he should meet me at the station and accompany me to my 
hotel. Before we left my secretary had asked me if there was any 
further material I wished her to include in my bag. By way of a 
joke I had said: “Put in Brockhaus, Volume B — ^there’s something 
about the Bank of England in it.” FrSulein StefFeck took the joke 
seriously and when we reached our London hotel presented me 
with Broclchaus. She had to take it back to Germany — ^unread) 

Dufour was at the station to meet me as arranged. I was not a 
little surprised to see, standing beside him, a tall man with a pointed 
greyish beard and shrewd, discerning eyes, who introduced himself 
as Montagu Norman, Governor of the Bank of England. He shook 
hands warmly and said in English : “ I am most heartily glad to see 
you: you are sincerely welcome. I’m especially pleased that you 
were able to follow up my invitation so quicldy. I have only come 
to welcome you but I won’t keep you any longer as you must be 
tired. Come and see me, will you, at the Bank of England tomorrow 
morning at eleven o’clock.” 

“But Mr. Governor, tomorrow is New Year’s Day — surely 
you won’t be going to the Bank tomorrow?” 

“ That doesn’t matter. I want to have a talk with you as soon as 
possible and I shall expect you at eleven. I hope we shall befriends.” 

Dufour accompanied me to the hotel. I expressed my pleasure 
and appreciation that my English colleague should have taken the 
trouble to come and meet me, especially on New Year’s Eve and at 
such a late hour. 

“Oh,” said Dufour, “Norman is very keen to make your 
acquaintance. He will certainly discuss matters of vital importance 
with you and you can count on his sincere understanding. When 
I told him you were coming and said I hoped you would get on 
well together he replied: T toant to get on well with him.* ” 

Dufour was not a career diplomat. He came of an old Huguenot 
titl^ family who for generations had been highly esteemed in the 
Lieipzig business community. After the First World War certain 



The Bank cf England igj 

influential politicians had felt that the old style of career diplomats 
would benefit considerably from the introduction and absorption 
of outstanding business figures. Several personalities from the 
business world, therefore, who were considered suitable, were 
appointed to the Foreign Ofiice and to various diplomatic posts 
abroad. Among the few whose appointment could be classed as suc- 
cessful Dufour took first place. Not only was he a clever far-sighted 
business-man, but he possessed a vast fund of general knowledge 
and the innate tact — ^the result of family tradition — slacking in so 
many business-men who had been pushed into the Diplomatic 
Service — a man of the highest social principles and thoroughly 
reliable character. In international circles he was entirely at home, 
whether from a linguistic, social or business standpoint. The 
way he backed me up during my visit to London made my task 
appreciably easier. 

I certainly did not make light of that task. Only a very few 
members of the Government realized the important results my 
visit might have on Germany’s immediate policy. Our struggle for 
the establishment of a stable currency was by no means over. 
Economically we were completely exhausted. The meeting of the 
Dawes Committee was imminent. Everything depended on being 
able to rouse the Allies to an understanding of our position, and 
to create a friendly atmosphere. In this connection my London 
discussions would not be without influence. 

In the Carlton Hotel where we were staying New Year festivities 
were in full swing. The rooms were full of men and women in tails 
and full evening dress. To the manager’s enquiry whether he 
should reserve a table for me I returned an evasive reply. I was not 
in the mood for dance music, champagne, crackers and confetti. 
Feeling somewhat anxious I turned in early. 

Next morning, the first day of the New Year, I became more 
intimately acquainted with Norman. Our conversation proceeded 
in friendly fashion, even when dealing with very serious essentials. 
I was completely frank with him regarding our situation. The 
discussion soon focussed itself on the most vital point, namely 
German currency. 

“Have you any definite plans for safeguarding your currency 
in s|ich unstable circumstances ? Or are you acting the decisions 
of the Dawes Committee ? You know that they intend to tackle the 
question of the stabilization of German currency first of all?’’ 

“I shall of course be very pleased, Mr. Governor, if the Dawes 
Committee will co-operate in stabilizing German currency. But I 
don’t vfant to rely on their decisions alone. Above all, I don’t 
want to wait until these decisions come up for discussion — that 



ig(f My First Seventy- Six Years 

may take months. Even if the Committee gets to work quickly you 
know that their decisions will have to be ratified through the various 
political bodies of the countries concerned. Such ratifications take 
up a lot of time and give rise to many complications. Furthermore, 
I am of the opinion that we should not only rely on others. We our- 
selves must act, and in view of the unstable economic situation we 
must act quickly.” 

“From your reply I may assume that you have plans of your 
own. What are they?” 

“First and foremost, as soon as the Ruhr dispute is ended it will 
be necessary to get German industry going again. For this we 
need to create opportunities for credit, opportunities which will 
enable foreign trade to be conducted on a stable monetary founda- 
tion. But at present I lack the means to achieve this.” 

“So you are looking for foreign credit? I hardly think you will 
obtain it at the moment in any appreciable quantity. It is pretty 
safe to assume that the other countries will await the result of the 
Dawes Committee before they proffer financial assistance.” 

“My plans are not limited solely to obtaining credit. I intend to 
found a second Credit Bank in addition to the Reichsbank, a 
bank based entirely on gold. This bank will only make loans against 
bills of exchange, and will give preferential assistance to tliose 
German industries which are able to resume export trade. Suppos- 
ing for the sake of argument I call this bank the Golddiskontba^.” 

“How you do reckon to procure funds for this bank?” 

“I picture this bank starting with a capital of two hundred 
million marks. This capital will be entirely in foreign currency, let 
us say in pounds sterling. I believe I shall be able to raise half of 
this capital in foreign currency in Germany itself. The remaining 
half I should like to borrow from the Bank of England.” 

“Are you proposing to make the Bank of England a shareholder 
in the Goldiskontbaj^?” 

“No, not that. I should like to obtain from you a loan for the 
Reichsbank of one hundred million marks in pounds sterling for 
three years. With this money the Reichsbank will take over the 
second half of the capital of Ae Golddiskontbank.” 

Norman was silent while he considered the matter. The idea of 
the Golddiskontbank was something quite new to him. With his 
limited knowledge of German economy he was imable immediately 
to appreciate the scope of the effectiveness of such a bank. 

“Who will be the directors?” 

“The management of this Golddiskontbank will be solely in the 
hands of the Reichsbank.” 

“Who will borrow from the bank?” 



The Bank of England 197 

“Having regard to the preponderance of Rhineland-West- 
phalian industry in the German economic 83ratem, and also to the 
severe damage suffered by the occupation of the Ruhr, the loans 
will chiefly be used, so far as the occupation of the Ruhr permits, 
to finance Rhinish-Westphalian industries.” 

“For such a project two hundred million marks could not 
possibly be sufficient.” 

“Naturally I have thought of that, and I should like to enlist 
your agreement and your support for a further project. As this is 
essentially a question of obtaining funds to meet deliveries of raw 
materials and for the export of goods, I believe that the bills which 
the Golddiskontbank will accept will be a suitable investment for 
the London money market. I wotfld ask you therefore to be so 
good as to allow these bills to be offered in the English market.” 

Another pause. Norman was aware that without the authoriza- 
tion of the Bank of England such bills would never be taken up by 
British bankers in any appreciable quantity. He seemed hesitant. 
Then I played a third card. 

‘ ' Mr. Norman, the Golddiskontbank will be an Issue Bank which 
will issue bank-notes based on its gold capital of two hundred mil- 
lion marlts. I intend to issue these notes in pounds sterling.” 
“You mean to issue notes in Germany in a foreign currency?” 
“At first glance the idea may strike you as extraordinary. 
But if a firm of exporters uses foreign currency in the course of 
business why should I not use foreign currency in my dealings 
with them?” 

Silence again while Norman thought this over. 

“And just think, Mr. Governor,” I went on, “what prospects 
such a measure would afford for economic collaboration between 
Great Britain’s world Empire and Germany. If we desire to establish 
European peace we must free ourselves from the limitations im- 
posed by mere conference resolutions and declarations of Congress. 
Economically, the European countries must be more closely linked. 
Somehow, somewhere, we must make a practical start in that 
direction.” 

Norman listened with visibly growing appreciation and interest. 
“You have some very remarlable ideas there, Mr. President,” 
He began to take kindly to my plans; we discussed a whole lot of 
supplementary questions and problems. 

“Well, Mr. President, I think that’s enough for today, I shall 
give all these matters my very careful consideration. Please come 
dong tomorrow at ten o’clock. Then we can proceed further.” 

I was quite excited when I returned to the hotel and told 
Dufour about our conversation. 



igg My Seventy-Six Years 

When I arrived the next morning I realized at once that my 
arguments of the previous day had not failed to impress Norman. 
He was in the best of humours and asked me to stay to lunch after 
our talk, as he wanted me to meet the members of his board of 
directors and some of his close colleagues. He signified his inten- 
tion also of discussing my proposals that very day with influential 
City men and hoped to be in a position to give me a definite 
answer on the morrow. 

“Today I should like to tell you about another matter, Mr. 
President, and ask your opinion. I have had a letter from M. Finaly, 
President of the hangue de Paris et des Pays-Bas, He informs me 
that a French banking syndicate, together with a group of Rhine- 
land banlcers and with the consent of the German Government, 
intend to set up their own Central Bank in the Rhineland which 
will issue their own bank-notes independently of the Reichsbank. 
M. Finaly asks me to mention some London banks who might be 
prepared to join this Franco-Rhineland syndicate. I should very 
much like to know, Mr. President, whether you are aware of this 
plan and what you think of it.” 

Unfortunately I was aware of it. I have no wish to go further 
into the regrettable separatist tendencies which were at work in 
the Rhineland and the Palatinate in 19*3 and which are painfully 
impressed on the memory of the German people. I am the more 
unwilling to do as some of the persons who sympathized with 
these tendencies — or at any rate were not opposed to them — are 
still active in public life. I had hoped that the cessation of the Ruhr 
dispute would have enabled Stresemann to put a stop to these pro- 
ceedings, That, however, had been possible only in the political 
sphere. In the economic field the separatist labours had continued. 
The Government’s inability to help in the rapid and practical re- 
establishment of economic life of Rhineland-Westphalia, and the 
efforts of Rhineland business groups to obtain any sort of assist- 
ance, had finally resulted in tWs distressing situation. The Marx 
Cabinet had allowed itself to be misled into surrendering to pres- 
sure from the, interested parties and granting permission for the 
establishment of an independent Rhineland Issue Bank with 
Allied capital participation. 

That much I knew. What I did not know until now was that 
preparations for such a separatist bank were already so far 
advanced that Anglo-French negotiations for its rapid completion 
were well under way. My reply to Norman’s enquiry v/as hesitating 
and obviously could not entirely conceal my mental attitude. 

“Mr. Governor, I am aware that the German Government has 
given its consent to this bank project.” 



The Bank oj England igg 

“I have no doubt that the French statement regarding the 
German Government’s consent is conclusive. However I am not 
greatly interested in that consent. What does interest me is what 
the Reichsbank thinks about it.” 

I breathed again. “The Reichsbank’s attitude is entirely clear 
and unequivocal. The Reichsbank is definitely opposed to this 
and to any similar project which seeks to restrict its own supreme 
power in matters of currency within the German Reich.” 

“Thank you, Mr. President. That is good enough for me. And 
now let’s go to lunch.” 

There was little of the modern office about the rooms sacred to 
the board of directors : on the contrary a pleasant private atmos- 
phere prevailed. Norman’s study was furnished in massive mahog- 
any. It was the same in the dining-room where everyone connected 
with the directorate was wont to foregather at Itmch-time. The 
rooms were all lofty and spacious but it was necessary to work by 
artificial light throughout ffie day, for the surrounding streets were 
narrow and the houses opposite took away a great deal of light. 
In 1924 the Bank had not yet been rebuilt and still retained much 
of its old-fashioned character which had earned for it the nickname 
of “The Old Lady of Threadneedle Street”. 

With inward pride Norman took me over the vast building and, 
with some emotion, into an inner courtyard resembling a Spanish 
patio, in the centre of which stood the memorial to those members 
of the bank who fell in the First World War. I was deeply impressed 
by this memorial which represented St. Christopher wading through 
the river with the Christ Child on his shoulder. 

During lunch I was introduced informally to all the members of 
the board of directors and the management. They responded in 
completely unselfconscious and friendly fashion, which contrasted 
pleasantly with former meetings with Allied circles in Paris and 
London. It was evident that Norman had already told them some- 
thing about me. Mentally he towered above the entire assembly. 
The Governor of the Bank of England is elected annually for a 
period of one year. For twenty years Norman was invariably 
re-elected, unaflfected by the changes in the British Government. 

With the passage of years my relations with Norman developed 
into a genuine friendship. As a young man he had studied music 
in Dresden and retained the happiest memories of his stay in 
Germany. For all his characteristic mellowness and outward calm 
he was a man of great personal determination and tenacity of 
purpose. In his younger days he had fought in the Boer War 
and still spent many of his holidays in South Africa. He had 
made many trips to America, where he enjoyed more than one 



200 


My First Seventy-Six Years 

highly-prized friendship. He was in constant correspondence and 
frequent personal touch with the presidents of many foreign Central 
Banks. 

When my daughter Inge’s third child was born Norman stood 
godfather. He came over to Berlin for the christening and held 
the child — who was given the names of Norman Hjalmar — over the 
font. 

We resumed our correspondence after the Second World War. 
By then he had retired and was in poor health. I wanted to go over 
and see him, but was unable to obtain an English visa and it was a 
great grief to me that I was refused one, even to attend his funeral, 
as I had not yet been officially denazified. Norman himself would 
not have cared. 



CHAPTER TWENTY-FIVE 


The Centre of Separatism 

N orman and I continued our conversation the following 
morning. 

“I have gone into your proposal most thoroughly and 
discussed it not only with my board here but also with my banking 
friends in the City. Do you really think you can raise one hundred 
million marks in foreign currency in Germany?” 

“lam convinced that I stand a very good ^ance of it.” 

“Then I am prepared to make you a loan from the Bank of 
England for a period of three years, for the purpose of establishing 
the Golddiskontbank.” 

“I am deeply grateful to you, Mr. Governor. I take it that I 
should have the right to repay the loan before the expiry of that 
period?” 

“There would certainly be no objection to that.” 

“What rate of interest does the loan carry?” 

“We will reckon interest at a flat rate of five per cent.” 

When one remembers that at that time interest in Germany was 
in the neighbourhood of ten per cent., even for financially sound 
debtors, it is easy to appreciate that this rate was a great concession. 
I accepted without further ado. No mention was made of guarantee 
or security. Norman was satisfied with an ordinary, simple under- 
taking on the part of the Reichsbank. 

“Mr. President, I and my friends have gone further into the 
question of the possiblity of discounting your bills in the London 
market. A group of London bankers is prepared to accept bills to 
the value of several hundred million marks, provided they are 
endorsed by the Golddiskontbank, so that you may count altogether 
on half a milliard working capital for your bank.” 

Once again I expressed my deep gratitude; I saw my Golddis- 
kontbank as a certainty, which at the same time would afford me 
the opportunity of giving a good “boost” to Rhineland-West- 
phalian industry. 

But Norman had yet another surprise in store for me. “Before 
you leave London,” he said, “I would like to show you the letter I 
sent to M. Finaly in Paris yesterday.” He handed me the carbon 
copy of his letter — scarcely more tW twenty lines in all. In the 



303 


My First Seventy-Six Years 

most courteous terms he acknowledged the receipt of Finaly’s 
letter and added that, as regards the proposed Centi-al Bank in the 
Rhineland, the Bank of England set less store by the German 
Government’s approval than by the opinion of the Reichsbank. 
In this connection Norman felt that he was justified in assuming 
that the Reichsbank was opposed to the project. As a result he 
regretted that he was unable to give M. Finaly the name of any 
Eng lish bank that would be willing to join the French syndicate. 

I handed the carbon copy back to Norman. I was deeply moved, 
for I realized at once that this letter meant the death-blow to 
Rhineland separatism. It was not from any political resentment that 
certain business groups in the Rhineland had agreed to support the 
project of an independent foreign-aided Central Bank but from 
sheer necessity, since their economic system, lacking both money 
and credit, was no longer able to find employment for the work- 
people under their charge. But that did not lessen the political 
damage which would be caused by giving way to this necessity. 

My secretary and I left the Bank of England with feelings of 
deep thankfulness for the deliverance that had been vouchsafed us. 
Norman accompanied us as far as the entrance to the courtyard 
where our car was waiting to take us to the station. The usual 
London fog had given place to snow, with thick flakes falling from 
a lowering winter sky into the light of the street lamps, Norman 
came up to the car, took a rug from the front seat and spread it 
over our knees. Then he waved good-bye from the steps as we drove 
away into the darkness. 

‘ ‘ I have never seen you so cheerful,” said my secretary, Fraulein 
Steffeck, as, from the stem of our ship, we watched England dis- 
appear in the fog. 

If I had imagined that the establishment of the Golddiskont- 
bank in Germany would be an easy matter I was doomed to severe 
disappointment. Opposition arose in the first instance from the 
business community in the Rhineland who were determined to 
establish their own Central Bank and regarded the President of the 
Reichsbank as their enemy. Hugo Stinnes went so far, in the course 
of the next few days, as to advise the German Government that 
the Rhineland business-men must decline to have any dealings 
with me. But for better or worse they were compelled, in the first 
instance, to deal with me. 

Scarcely was I back in the Reichsbank when I received a call 
from the Chancellery inviting me to attend a conference with 
representatives of Rhineland industry on the question of the 
Rhineland Central Bank. The Chanc^or, Herr Marx, took the 



The Centre of Separatim 203 

chair ; there were also presentHerr Luther, the Minister of Finance, 
some permanent heads of departments, and four leading figures 
from the Rhineland business community. The last name d had come 
to the conference in a somewhat exultant frame of mind : had not 
the French as good as promised to furnish some of the necessary 
capital ? Furthermore, leading Rhineland politicians had succeeded, 
only a few days previously, in bringing about the discharge of 
Herr Bracht, ^e Prussian Secretary of State, who had defended 
Prussian interests in the R hi neland with courage and tenacity. 
Under pressure by these political forces it had been necessary to 
remove Bracht from office. 

The Rhineland deputation opened the conference with a lengthy 
description of the hopeless economic conditions in the Rhineland, 
and the urgent request that, in accordance with French desires, the 
Government would now execute an official deed ratifying their 
consent to the establishment of the Rhineland Central Bank. The 
arguments brought forward seemed to me weighty but not suf- 
ficiently convincing., During these speeches I jotted down the 
following verse* and passed it around among my colleagues on our 
side of ihe table, causing a good deal of quiet amusement: 

“The Rhinelanders, with white-hot ire. 

At Bracht and Schacht direct their fire. 

Bracht’s efforts have been curbed, 

Schacht remains unperturbed.” 

The Chancellor then called upon me to speak. I agreed that the 
Rhinelanders had described the situation correctly, but emphasized 
the need for self-help. Nor did I hesitate to point out the political 
consequences which would inevitably arise from our acceptance 
of French aid. 

“Unfortunately,” countered the opposite camp, "the Govern- 
ment has so far not been in a position to help us. Our programme 
of self-help can only go forward if supported by French capital. 
Or do you know any other way, Herr Schacht?” 

“Yes, there is another way.” 

I then proceeded to unfold my plan for the Golddiskontbank in 
all its details. The one item I kept back was Norman’s letter to 
Finaly; nor did I ever once breathe a word of it in the course of 
ensuing developments. This is the first time I have referred to it 
after a lapse of thirty years. I did not do so at the time because I 

• "Dfis MheMands Wut ist glutentfacht, 

teils gegen Bracht, teils gegen Schacht. 

Bracht ist schon abgeschossen, 

Schacht ist noch unverdrossen." 



304 First Seventy-Six Years 

realized something that the Rliinelanders could not know — ^namely, 
that the French had begun to get cold feet. 

The deputation of course raised a whole lot of objections to my 
plan, which they described as unfeasible, and, when I had demo- 
lished these objections, they finally persisted in their contention 
that it would be utterly impossible for me to raise one hundred 
million marks in foreign currency in Germany, which represented 
the German half of the Golddiskontbank’s capital. 

This caused the Chancellor to ask me: “Herr Schacht, we have 
to come to a definite decision today whether or no to give official 
assent to the Rhineland Central Bank. Following the objections 
put forward by these gentlemen we can, I think, only come to such 
a decision if we are quite clear in our minds as to whether you can 
or can not raise this one hundred million marks.” 

Since this Government conference took place immediately on 
my return from London I had had no opportunity to put out any 
feelers or do anything about finding that hundred million. I had 
now therefore either to risk a Government decision in favour of 
the Rhinelanders or to shoulder the responsibility for achieving 
the hundred million. So I said: — 

‘‘Herr Reichshamsler, I undertake to find the hundred milUon 
marks and am confident that I shall be able to raise that 
amoimt.” 

“Under these circumstances, gentlemen,” declared the Chancel- 
lor, “you will understand that, in view of the responsibility which 
the President of the Reichsbank has assumed, the Government 
cannot feel justified in according permission for the establishment 
of a Central Bank in the Rhineland.” 

The deputation withdrew after expressing their dissatisfaction 
and disappointment. 

During the days immediately following I arranged meetings 
with several banks and banking firms and within a few days had 
the satisfaction of ascertaining that the requisite amount of one 
hundred million gold marlrs liad been subscribed in foreign 
exchange. 

I was now able to proceed immediately with the establishment 
of the Golddiskontbank. It was necessary that the Reichstag should 
pass a Bill to this effect. A draft of the Bill was prepared by us and 
submitted to the Reichstag by the Government, whence it passed 
to the usual committee for discussion. Here I met with further 
opposition. The conservative element, who had already shown 
considerable disapproval over the Rentenmark question, suspected 
that their influence would be still further restricted and deputed 
Helflerich to enter the lists against me. One of his contentions 



The Centre of Separatum 205 

was similar to that which I had raised in connection with French 
participation. He feared the effects of foreign influence on the 
management of the Reichsbank. I was able easily to point out that 
capital participation in an undertaking, as envisaged by the French 
—particularly with a foreign majority — could very well achieve 
such an undesired effect. But in my case it was simply a matter of 
an ordinary straightforward loan which I could repay at any time 
within three years. There could be no question whatever of any 
influence connected with the conduct of the Reichsbank. 

Finally Helfferich said that he feared the interest on the loan 
would prove too heavy a burden and would be detrimental to the 
Reichsbank. “What rate of interest do you have to pay, Herr 
Schacht?” 

My reply was received with obvious amazement ; even Helfferich 
could think of no retort to my curt statement “ Five per cent., Herr 
Helfferich”. Everyone knew that at that time the normal rate of 
interest was double that amount and more. The debate in com- 
mittee ended with a resolution that the Bill for the establishment 
of the Golddiskontbank be submitted to a plenary session of the 
Reichstag. 

But the trials and tribulations of the Golddiskontbank plan were 
not yet over, for in the meanwhile the Dawes Committee had met 
in Paris. Its members were not a little discomfited when they learnt 
what I had been able to achieve in the interval from the point of 
view of monetary policy. Of course I had to tell them about the 
plan for the Golddislcontbank. They naturally wanted the credit 
for the final stabilization of German currency to be a feather in the 
committee’s cap, and did their utmost to keep putting off the actual 
establishment of the bank. It was inevitable that Germany’s econ- 
omy should suffer under this policy of procrastination — a state of 
affairs I was not prepared to put up with. So I had recourse to 
means which I frequently adopted in later years; I took refuge in 
publicity. 

In a speech at Kdnigsberg at the beginning of March 1924 I 
described the Dawes Committee’s policy of delay and declared 
that I could no longer accept responsibility for the maintenance 
of the Rentenmark if stumbling-blocks were continually put in my 
way. I incurred considerable displeasure on the part of the com- 
mittee, but I achieved my object — ^they withdrew their objections 
to my plan. 

The Golddiskontbank was established on the 13th March 1924. 
Right up to the collapse of Germany in 1945 it contributed suc- 
cessfully, as an auxiliary of the Reichsbank, to the maintenance of 
currency and to the expansion of German exports. The continued 



306 


My First Seventy-Six Years 

progress of stabilization due to the Reichsbank policy made 
it unnecessary for the Golddiskontbank to contemplate issuing 
bank-notes. It is true that we did print Golddiskontbank notes 
payable in pounds sterling as discussed with Norman, but they 
were never put into circulation because in the interval the Reichs- 
mark had achieved, and thereafter maintained, its gold parity. 



CHAPTER TWENTY-SIX 


Monsieur Poincare 

O N the 33rd January 1924 I arrived in Paris at the request 
I of the Dawes Committee. Instead of coming to Berlin they 
had preferred to discuss the German economic situation 
first in Paris, and my presence was required as a source of informa- 
tion. On the afternoon of my arriv^ I had to appear before a 
sub-committee under the chairmanship of the American, Owen 
Young. Anyone with experience of the years immediately following 
Germany’s collapse in 1945 can picture something of the anti- 
German atmosphere of those earlier days and understand that 
I approached this new task with some inner anxiety, 

Owen Young greeted me in true American fashion with a 
hearty handshake and the customary “How do you do”. The 
Frenchman shook hands with obvious reluctance, the Belgian 
hesitatingly, the Englishman coolly. The sense of constraint 
vanished only when the Italian — ^Professor Flora from Bologna — 
shook hands warmly with a good old Austrian *‘Habe die Ehre,*' 
(“ It’s a pleasure, ”) 

Then the examination started. The secretary of the sub- 
committee, a Belgian, had prepared a lengthy questionnaire. I 
don’t know if that questionnaire was in any way comparable with 
the one we were submitted to after 1945, but so far as I could tell 
from a glance, the number of questions cannot have been much 
smaller. It would have taken days to answer all those questions, 
as the first of them, with their replies, showed. The practical 
American soon had enough of it. 

“Gentlemen, we shall never get through at this rate. I think we 
should do far Ijetter to ask Herr Schacht to give us a coherent 
report on the economic and financial conditions in Germany as 
they were, and as they stand today.” 

Even at that time the Americans carried so much weight in 
international matters that no one ventured to object, I was in no 
sense prepared for such an eventuality, but conditions in Germany 
were of course so familiar to me that I dedaredi without any 
hesitation, that 1 was ready to do as the committee asked. 

So for nearly two hours I gave theta, extempore and in English, 
a detailed report. I described how Germany’s resources had been 



2 o 8 My First Seventy-Six Years 

drained dry by the war, the compulsory deliveries of materials, 
the Ruhr dispute, and inflation. I added an account of what, in the 
meantime, we had achieved off our own bat. I told them of the 
Rentmmark, the Reichsbank, the Golddiskontbank, and concluded 
with the words : 

“I think, gentlemen, I have given you an exhaustive report on 
conditions in Germany. I have only one additional request to make. 
My presence at home is urgently needed: the progress of the 
policy already begun demands it. I would ask you therefore to 
allow me to return to Berlin as soon as possible.” 

The effect was unexpected. The sub-committee expressed its 
satisfaction at my report but there could be no question at this 
stage of my early return to Gernoany. The measures I had mean- 
while adopted in Berlin had been noted with the greatest interest. 
Up to a point, however, they proved disappointing, for after all the 
Dawes Committee had come to Europe with the express object of 
stabilizing German currency, and they now found that a consider- 
able part of the work had already been accomplished. The impres- 
sion must not be allowed to get abroad that in this important matter 
the work of the Dawes Committee was superfluous. So the public 
was informed that in the course of its first discussion with me, the 
committee was most gratified to note that my ideas and aims 
coincided with those of the committee and that further discussions 
would follow. 

There was a distinct improvement in the atmosphere, though in 
the next plenary session I still felt like a prisoner in the dock. The 
members sat at a long semicircular table while I had to make my 
report from a land of “stool of repentance” facing the semicircle. 
But I experienced considerable inner satisfaction from the fact 
that Germany had, by her own efforts, made a successful beginning 
on the work of stabilization and in so doing had aroused respect and 
established her position at future deliberations. 

Being obliged to resign myself to a longer sojourn in Paris, I 
began to pay a few calls, first and foremost on my opposite number, 
M. Robineau, Governor of the Banque de France, who received 
me politely. My second visit was to M. L6on Barthou, Chairman 
of the Reparations Commission, under whose aegis the Dawes 
Committee had been convened and assembled. I looked upon 
these two visits as matters of duty. Suddenly, I received a sum- 
mons from the Chancellery to call on M. Millerand, the President 
of the Republic. Millerand was reckoned a Right-wing Socialist 
with a reputation for opportunism. At our interview I found him 
fairly forthcoming in many respects, but, in the long run, of the 
same narrow political outlook I had experienced in M. Barthou. 



Monsieur Poincare 


209 

Millerand too was unable to shake off the prevailing French fear of 
Germany. Dunng our half-hour’s conversation I failed to convince 
him that Franco-German underatanding, which I described as an 
urgent necessity, could most quickly be restored by the closest 
possible economic connections. Millerand stuck to his lawyer’s and 
politician’s attitude where Germany was concerned. 

This visit to the head of the French State, which I had not felt 
able to decline, did not make me anxious for any further talks with 
French politicians. In the meantime my visit to Millerand worried 
M. Poincard, the Prime Minister. M. Barthou came to see me 
one day and tried to persuade me that I should also call upon 
M. Poincard. 

“I did not come to Paris for political discussions, M. Barthou. 
Naturally I called upon you in your capacity as chairman of the 
Reparations Commission. If I visited the President of the Republic 
it was because he himself requested me to do so. I have no vidsh 
to take the first step in calling on M. Poincard. If M. Poincard 
wishes to see me it is for him to send for me. In that case it would 
of course be most discourteous on my part not to comply with such 
a request. And I have no desire to be discourteous.” 

“But Herr Schacht, you can understand that since you have 
called on M. Millerand, M. Poincard attaches considerable im- 
portance to a visit from you. M. Poincard is head of the Govern- 
ment and therefore cannot simply overlook the fact that, while 
you have called on the President of the Republic, you ignore the 
head of the Government.” 

“I haven’t the slightest intention of ignoring M. Poincard. I am 
quite aware of M. Poincard’s outstanding political position. But I 
am here once and for all as a business-man at the request of the 
Dawes Committee, and I have nothing to do with politics. The 
Dawes Committee does not come within the domain of the head 
of the French Government but within your own domain, M. 
Barthou, as chairman of the Reparations Commission.” 

“But you don’t understand, Herr Schacht! M. Poincard insists 
on seeing you.” 

“Then let him send for me.” 

“He can’t possibly do that. Parliament would look upon such 
action on his part as most suspicious from a political point of view.” 

I stuck to my guns. It took two more days with a lot of coming- 
and-going in which the French Foreign Ofiice also took a hand, 
before I would give in. After all, Poincard was the most powerful 
man on the entire Allied Council. 

“I can assure you, Herr Schacht,” concluded M, Barthou 
when all the preparations were complete, “if you present yourself 



210 


My First Seventy-Six Years 

at the Quai d’Orsay at five o’clock tomorrow afternoon the Prime 
Minister will receive you immediately.” 

Punctually at five o’clock the following afternoon I arrived at the 
Foreign Office on the Quai d’Orsay where M. Poincare had his 
quarters. I was relieved of my hat and coat and taken into one of 
those luxuriously appointed rooms in the Louis Seize style which 
appeals to us even today. A clock on the mantelpiece confirmed that 
the time was exactly five p.m, I waited five minutes; I waited ten 
minutes. I began to grow impatient and waited another five 
minutes. I remembered Barthou’s promise that there would be no 
delay. I waited another three minutes. Then my patience gave out. 
I saw no reason to put up with discourtesy, even from the French 
Prime Minister. I asked the manservant to give me my hat and coat 
and to inform His Excellency that unfortunately I had been unable 
to wait any longer. The manservant tried to stop me, but I took 
my departure quickly. I had gone downstairs and had already 
crossed the forecourt and reached the sidewalk when I heard my 
name called. Two menservants, one in red the other in black, came 
running after me and informed me that the Prime Minister had 
been entertaining some visitors but that Plis Excellency begged me 
to return. He would ask his visitors to wait and would receive me 
at once. Since I did not wish to be discourteous I turned back. 
M. Poincar4 was standing in the entrance to his study. 

A few weeks later the whole incident was featured in a satirical 
Paris weekly with the caption: Dr. Schacht ne peut pas attendre, 
(Dr. Schacht can’t wait.) 

My interview with M. Poincar^ lasted nearly an hour. To him 
also I expounded the German situation. I explained how utterly 
impossible it was for us to pay reparations totalling one hundred 
and twenty milliard marks. I tried to make him see that Germany 
could only pay by exporting goods to an extent which would never 
be tolerated by other countries, least of all by France herself. I 
pointed out that such exports would stifle competitive industry in 
the Allied countries. Yet there was no other way of conveying the 
required amount of reparations from Germany to other nations. 

It became evident that I had to deal with a thoroughly intelligent 
and highly cultured man. But it was equally evident that he was 
prepared to subordinate all other considerations to his political 
aims, viz., to reduce Germany to a state of complete disablement 
and degradation. He continued to insist on payment. 

“Mr. Prime Minister, you could aflSx a notice to every house 
in Germany: ‘This house is the property of M. Poincar^’ 
without being one cent better off. To be the owner of houses in 
Germany would not help you one scrap. You would not even 



Monsieur Pmncari 


211 


be able to transfer the rents from German currency into French 
currency.” 

Poincare remained obdurate. He understood very well what 
I was talking about, but his one desire was to keep Germany in 
subjection. 

I rose. 

“I regret that in these circumstances it would be useless to 
continue our conversation. I shall leave this room far less hope- 
fully than I entered it.” 

Our leave-taking was icy. 

From a member of his entourage I learnt during the next few 
days that Poincare had declared that I was the first German who 
had told him in plain terms what Germany wanted, and the first 
person to break off a discussion with him. 

I had, of course, to report in detail to our ambassador in Paris and 
he in turn passed the information on to Berlin . The result was that the 
story of my visit to Poincard, with all the attendant circumstances, 
spread rapidly. Our ambassador was horrified at the stand I had 
taken and there was a good deal of head-shaking among members of 
the Cabinet, Only General von. Seeckt chuckled when he heard the 
story. I set greater store by the chuckles than the head-shaking. 

It took another eight years before the Allied politicians realized 
that the whole policy of reparations was an economic evil which 
was bound to inflict the utmost injury not only upon Germany but 
upon the Allied nations as well. Of the one hundred and twenty 
milliards which Germany was supposed to pay, between ten and 
twelve milliards were actually paid during the years 1924 to 1932. 
And they were not paid out of surplus exports as they should have 
been. During those eight years Germany never achieved any 
surplus exports. Rather they were paid out of the proceeds of loans 
which other countries, acting imder a complete misapprehension' 
as to Germany’s resources, pressed upon her to such an extent that 
in 1 93 1 it transpired that she could no longer meet even the interest 
on them. Finally, in 1933, there followed the Lausanne Conference 
at which the reparations commitments were practically written off. 
Of the precribed one hundred and twenty milliards a clear ten per 
cent, had been paid. On the other hand each and all of the foreign 
loans made to Germany, amounting to a clear twenty milliards, 
remained outstanding. The Allied Governments pocketed the ten 
to twelve milliard reparations, but foreign private investors lost 
their money on the loans made to Germany. 

But in 1924, at the time of my visit to Paris, the French people 
were obsessed by the delusion that they would receive milliards 
arid milliards from Germany. ^ 



312 My First Seventy -Sis Years 

During that period I liad to make a business trip from Paris to 
London for the day. My only chance was to take the night train 
and cross from Dieppe to Newhaven. As a German I was relegated 
to the end of the queue passing through the French passport- 
control. When at last my turn came I was obliged to answer a 
lengthy enquiry-form full of the most idiotic questions. 

“Your name?” 

“Schacht.” 

“Father’s name?” 

“Also Schacht.” 

Finally, when it became too much of a good thing I said: 
“Don’t you ever read any newspapers?” 

“Of course I do, sir,” replied the somewhat astonished official. 
Up to now it was he who had asked questions. 

“Then you should know my name. Haven’t you read that I 
am in Paris on account of reparations talks?” 

A smile spread itself over his face. He became more affable. 

“Ah I so I can write under Reason for journey, ‘Payment of 
reparations’ ?” 

“Yes, you can certainly write that.” 



CHAPTER TWENTY-SEVEN 


A Painful Recovery 

I T was unfortunate that my business with the Dawes Committee 
lasted so long. The Rentenmark could now be reckoned as legal 
tender, thanks to the mllingness of the Reichsbank occasionally 
to accept the same at gold mark rates. Consequently, certain circles 
began to resume their practice of selling Rentetimarks abroad 
against foreign bills, not however, with the intention of using such 
bills to pay for imports but in order to replenish their hoards of 
stable securities. As early as 1924 the Rentenmark was quoted 
below par, and was therefore at a discount which soon reached some 
fifteen per cent. 

When I was once more able to take up my duties at the Reichs- 
bank and realized that the mark was again having to stand up to 
speculation my colleagues and I took counsel together and decided 
on a drastic step. Fine speeches about maintaining the stability 
of the mark were completely useless. It was necessary to show the 
speculators that the Reichsbank did not stop at mere words, but 
meant business. 

Once the public loses confidence in a currency, not even the 
highest rate of discount will scare off speculators. It does not matter 
if he has to pay ten, twenty or thirty per cent, per annum if the 
value of the currency drops five, ten or fifteen per cent, from one 
month to the next. It was no good therefore attacking foreign 
exchange speculators with higher interest rates ; we should have to 
launch an attack on the supply of funds. We decided on a complete 
stoppage of credit to the business community on the part of the 
Rei<^8bank. We realized that such a stoppage would not only be 
most awkward, to say the least, but that it contained a certain 
amount of injustice in that it would hit the innocent as well as the 
guilty. We comforted ourselves with the thought that the stoppage 
would not last long but that the exchange situation would return to 
normal in the shortest possible time. 

In order to set the necessary machinery in motion we resorted 
to a method which has subsequently often been copied in the 
political world. On Saturday, 5th April 1924, after the Stock 
Exchange had closed, we announced that as from Monday, 7th 
April, ^e Reichsbank would not increase its total holding in 



214 My First Seventy-Six Years 

foreign bills and would therefore not accept further bills. That 
gave the public a day and a half in which to familiarize themselves 
TOth the announcement. 

The step we had taken was in direct contradiction to all the 
traditional rules concerning Central Banks. It was also probably 
the first time in economic history that a Central Bank deliberately 
refused to grant credit. According to traditional business principles 
the idea of a Central Bank was that the said bank should meet 
advances on bills at any time, and counteract an excessive influx 
of bills simply by increasing its discount charges. But, as already 
mentioned, no discount policy would avail to win a race against 
devaluation of currency. 

The Reichsbank’s action aroused absolute panic in the business 
world. The storm that broke over my head was a pretty complete 
hurricane. That any President of the Reichsbank should dare to 
resort to such measures, not only against all theoretical rules but 
at such short notice that nobody was able to take appropriate 
action seemed to the entire business world completely outrageous. 
But it was this same short-dated execution of our plan that was 
calculated to achieve the desired result. 

I had to give the foreign exchange hoarders a shock and leave 
them no time to extricate themselves from their dilemma. It was 
not a question of material, but first and foremost of moral, effect. 
People must understand once and for all that the Reichsbank would 
make use of any means to ensure the stability of the mark. If the 
German business community had given their solid support to the 
new currency from the beginning, the events of the 7th April 1924 
would never have happened. Now, however, matters had reached a 
point where we had to risk a trial of strength between the specula- 
tive interests of individuals and the upholding of the general 
interests of the German people. I was never for a moment in 
doubt that this defence of the general interest would earn for the 
Reichsbank the approval of the masses. 

Meanwhile, “Destroyer of German Industry” was the least 
opprobrious epithet coined for my benefit. The one reproach that 
I did take seriously was that of injustice towards decent business 
folk. For the rest, reproaches left me cold. By means of most 
careful treatment of our customers we began to counteract injus- 
tices during the days and weeks that followed. We did not decrease 
our portfolio but maintained it at the same level. Any money 
which came back to the Reichsbank from matured bills was used 
to grant credit to those businesses in special need of it. Since the 
Reichsbank controlled nearly four hundred undertakings and 
subsidiaries throughout the cotmtry this policy soon proved its 



A Painful Recovery 215 

worth. The hoarders, on the other hand, did not get their expired 
credits renewed, nor were they granted fresh credits. So they 
were obliged to resort to the same action which I had forced 
them to adopt at the end of November 1923, namely, to hand 
over their hoarded foreign bills to the Reichsbank in return for 
Reichsmarks. 

The results of this action were surprisingly swift and surprisingly 
effective. Between the 7th April and the 3rd June 1924, that is to 
say within fifty-seven days, no less a sum than eight hundred mil- 
lion marks in foreign exchange bills returned to the German 
Reichsbank. Since the last years of the war it had never been 
possible to satisfy all business demands for foreign bills. For months 
on end during the inflation period we had been able to meet only 
am per cent, of such requirements. On the 3rd July the Reichs- 
bank was able for the flrst time to meet all demands for foreign 
bills in full ; and it continued to be in a position to do so until the 
financial crash of 1931 once again put a stop to it. Of which more 
later. 

Abroad, the moral effect produced by this painful but rapid 
process of recovery was astounding. It had been completed before 
the decisions of the Dawes Committee came into operation, Confi- 
dence in the management of the Reichsbank increased, not only in 
Germany itself but more especially in other countries. A second 
“ epidemic ” of inflation during those fateful months would have 
brought wellnigh irreparable damage to Germany. In all proba- 
bility it would have encouraged the Allies to exercise appreciably 
greater intervention and wider control over German business and 
financial affairs. The decisive action of the Reichsbank and its 
complete mastery of a dangerous situation showed the world that 
Germany was in a position to resume her place as a financial 
partner. Once again our international credit rating stood at a 
satisfactory level. Germany’s reputation as an honest business-man 
was saved. 

When, thirty years later, some fools sought to impugn my 
conunerdal honesty, I was reminded of these events of the early 
summer of 1924. Folly that has achieved power is not only 
dangerous; it is dso contemptible. 

The decisions of the Dawes Committee and the resultant policy 
are well known. They led to a reform of the Reichsbank which 
provided for a supervisory body consisting of seven foreigners and 
seven Germans in addition to the German board of directors and 
the German president. The British member of the Dawes Com- 
mittee, Sir Robert Kindersley, and I were entrusted with the 
working out of the individual regulations within the framework 



zi6 My First Seventy-Six Years 

of this politically determined directive. Goodwill on both sides 
resulted in a basis of mutual confidence which made it possible 
to keep the foreign influence on the management of the Reichsbanlc 
within reasonable bounds. The President of the Reichsbank was 
chairman not only of the German board of directors but also of 
the international supervisory body, which functioned for six years 
until 1930. On no single occasion during this period was there any 
question of unpleasant arguments or divergencies of opinion. No 
majority resolutions were passed. Our co-operation was harmonious 
from every point of view. There was an atmosphere of mutual 
trust among all the foreign members, many of whom became my 
very good friends. 

I was on especially intimate terms with the Dutch representative, 
Professor Bruins, who was also commissioner for the printing 
of bank-notes; also with the Englishman, Sir Charles Addis, the 
Swiss, Professor Bachmann, the American, McGarah, and the 
Italian, Signor Feltrinelli. Even with the Belgian representative, 
M. Callens, and the Frenchman, M. Sergeant, I was always on good 
terms. There was close collaboration, too, with Parker Gilbert, 
who had been appointed agent for reparations under the Dawes 
Resolutions and whose duty it was to supervise the payments. 

Taken all round, the year 1924 was one of the most exciting of my 
career. It closed with the successful issue of the so-called Dawes 
Loan in Allied and neutral countries, from the proceeds of which 
eight hundred million gold marks poured into the Reichsbank 
in the guise of foreign bills, enabling the bank to taclde its further 
duties with an ample reserve of gold and foreign exchange bills. 

I had reason to be satisfied with the result of my labours and 
I was particularly pleased at the recognition accorded by oAer 
countries. When it was all over I received a letter from Owen D. 
Young of the Dawes Committee; 

Dear Dr. Schacht. 

I have today found among my papers a letter which Mr. Bates 
(secreta^ to the Dawes Corrimittee) wrote to one of his influential 
friends in America. I cannot resist the temptation to quote you 
that part of the letter that refers to yourself. It expresses my own 
feelings exactly, as well as those of Mr. Bates. 

" Sinw January of this year Schacht has been a tower of strength 
in Berlin in every sense of five word. ... In order to avoid 
another period of inflation he went to such lengtlis in refusing to 
grant credits that some failures resulted in individual branches 
of Germm industrjr. In spite of threatening letters, open criticism 
and political opposition he never batted an eyelid and displayed 
quite extraordin^ courage.” 



A Painful Recovery 217 

And on the last day of the year I received a New Year’s letter from 
Baron Bruno Schroeder, head of the English banking firm of 
Schroeder & Co., which contained the following words: 

You can look back with pride on your activities during the old 
year, for I am convinced that had it not been for you the atmosphere 
would not have been created in London which was so needed for 
the reconstruction of our poor old country. 

I experienced no little satisfaction at having contributed in some 
measure to the restoration of international confidence in Germany. 
Our credit stood once again on firm foundations. Now we had to 
make certain that we did not misuse this credit. In my own mind I 
was quite clear that for the reconstruction of her industry Germany 
would have to buy raw materials, foodstuffs and perhaps also 
certain machinery from abroad. To borrow from abroad for such 
purposes was a thoroughly common-sense action. But these loans 
must not overstep the bounds imposed by such necessity. Under 
the Dawes Plan we were committed to an annual payment averag- 
ing two milliard gold marks. This debt had to be paid in foreign 
currency and this foreign currency could only be obtained by 
surplus exports. If we were also compelled to furnish instalments 
on interest and principal in foreign currency our annual indebted- 
ness abroad would increase with every loan and force us to export 
in ever greater quantities. 

From the first moment of my joining the Reichsbank I had 
emphasized the dangers of such indebtedness in all Government 
Departments to which I had access, as well as in public at home 
and abroad. The whole of the six years that made up my first 
period as President of the Reichsbank were taken up with the 
struggle for the limitation of our foreign indebtedness. 

My opponents in this struggle were as shortsighted as they were 
numerous. They were to be found in the world of business, in 
municipalities and, not least, in Government ofiSces. The impover- 
ishment in Germany brought about by the war was positively 
horrifying. Industry was in desperate need not only of money for 
the purchase of raw materials ; it cried out for capital to invest in the 
restoration and improvement of its means of production. To expect 
this capital to accrue from even the most economical management 
and from the thriftiness of the population was inopportune as well 
as a waste of time. A much quicker result could be achieved from 
the proceeds of a foreign loan. In the course of the next few years a 
considerable proportion of big business firms had incurred debts 
on foreign loans. 

To this was added another factor. The end of the war had been 

8 



2i8 My First Seventy-Six Years 

attended in Germany itself by revolutionary portents and had 
raised revolutionary politicians to posts of responsibility. Revolu- 
tions, however, are only kept within bounds if the masses can 
perceive some outward advantages to themselves. Instead of 
making up their minds, after their defeat, to live and manage on 
the most modest and economical basis, everyone succumbed to 
the demands for increased standards of living and a good time in 
general. At the head and front were the municipal corporations 
with a preponderance of Social-Democratic circles and those with 
similar tendencies. Many municipalities took up loans in foreign 
currency which found ready investors abroad, especially in the 
United States of America, but also in Switzerland, Holland and 
elsewhere. 

It was regrettable that in face of these attractions at home, the 
Social-Democrats should have failed to realize that all foreign 
monies which did not serve to increase our production were bound 
to have a particularly adverse social effect. Foreign currency 
could only be spent abroad, which led to an increase in foreign 
imports, especially in finished articles. This meant that German 
manufacturers of such finished articles would suffer, which, in 
turn, would lead to unemployment. 

Even if one could think that industry might be in a position to 
meet both interest and principal on these loans out of exports, 
this most certainly did not apply to public bodies whose income 
consisted not of export earnings but of rates and taxes in German 
currency. Business as a whole had therefore to find the foreign 
bills to meet interest and principal on foreign public loans. Public 
authorities turned in their bills from foreign loans to the Reichs- 
bank, for which the latter had to pay in marits. When, however, the 
moment arrived for public authorities to pay interest and principal 
in foreign currency, the Reichsbank had to furnish the necessary 
foreign bills and received only marks in return. In this way, 
public authorities were consciously acting in defiance of their 
business obligations — a fact that I once tried to explain to a young 
business friend by means of a humorous illustration. The young 
fellow had borrowed in English currency and invested in Danzig 
currency. When he asked me whether he had acted rightly I 
replied: “If you owe your creditor so-many hens you should not 
keep ducks.” 

In the course of years more than twenty milliards in foreign 
curren^ came into the country, and our indebtedness increased 
by a like amount. Had this foreign currency remained in the 
Reichsbank, the bank would have been able to repay at any time. 
That, however, was not possible, as by this time we had to meet 



A Painful Recovery 2ig 

our obligations under the Dawes Plan. Every year the agent for 
reparations claimed his two milliard gold marks in foreign currency 
from the Reichsbank. The money which had come into the coun- 
try in the form of foreign loans went out of the country to meet 
payments under the Dawes Plan. 

It was only possible to play this tantalizing but highly dangerous 
game as long as foreign loans continued to come into Germany. 
But directly these foreign loans stopped, payment of reparations 
under the Dawes Plan would also stop automatically. The foreign 
loans were therefore in the highest degree instrumental in pro- 
longing the payment of reparations. Had we ceased sooner to 
accept foreign loans the question of reparations would have been 
settled much earlier. Instead, the political circles of the day per- 
sisted in encumbering Germany with foreign loans — ^that is to 
say with foreign debts — ^notwithstanding the Reichsbank’s contin- 
ual warnings ; and the blame that attaches to them in this respect 
cannot be sufficiently emphasized. 

Unfortunately other countries also failed to heed my warnings. 
International financial agents and banking firms positively vied 
with one another in urging Germany’s acceptance of these loans. 
Foreign agents practically besieged captains of industry and muni- 
cipal authorities with offers of loans. It was almost impossible to pass 
the Adlon Hotel, Unter den Linden, without being buttonholed by 
some financial representative who would enquire whether there 
were no business or mmiicipal concern to whom he could offer a 
loan. 

Again and again the Reichsbank, in the interests of German 
currency, tried to persuade the Government to grant the bank 
a right to veto the acceptance of foreign loans. The request was 
invariably refused. Chancellor Briining was the first member of 
the Government to admit in the autumn of 1931 that piling up 
of foreign debts had been a great blimder. But by then it was 
already too late. The bank crash had set in by July 1931. The 
victims were those thrifty foreign investors who, trusting to the 
recommendations of their banks, had subscribed to the German 
loans abroad. 

By the spring of 1925 I felt that the currency situation was 
sufficiently under control to enable me to talce a long-overdue 
holiday. With my wife and the two children we committed our- 
selves to the care of the ss. General San Martin of the Stinnes Line 
which was to take us from Genoa through the loveliest part of the 
Mediterranean. , It was one of those so-c^led conducted tours, 
stopping at various ports from which there would be excursions 



220 


My First Seventy-Six Years 

inland, and in the course of which one made many pleasant 
acquaintances. One such acquaintance developed into a real 
friendship. Among the passengers was Lieutenant-Colonel Siegert, 
Chief of the Air in World War I, and his young wife. He was 
a first-rate soldier, a fine man and a brilliant intellect. We became 
fast friends during this cruise and remained so until he succumbed 
to an attack of influenza a few years later. 

The General San Martin touched successively at Taormina in 
Sicily, Constantinople, Cairo, Athens and, on the return journey 
to Hamburg, at Palma di Mallorca, Malaga and Lisbon. 

I took advantage of the trip to explore the history of the Medi- 
terranean countries with my children, from ancient times to the 
present day — ^not as “lessons” but in conversation about things 
the children themselves knew, what we saw and what our fellow- 
passengers contributed to the talk. 

On my return to Berlin from our cruise I immediately became 
immersed in the struggle against reparations, a task that was to 
involve me in fresh anxieties and fresh work. But before I go further 
into that subject I must mention an amusing little incident. 

One morning I found on my desk a gaudily-printed piece of 
sheet music such as was fashionable in the early twenties. I opened 
it and to my amazement read : “ Spielmannsli^ (Minstrel’s Song) : 
Words by Hjalmar Schacht.” It was, in fact, one of the poems 
I had written at the age of nineteen for a feUow-student who was 
a musical enthusiast and had wanted to make it into a light opera. 
A firm of music publishers had somehow got hold of it and was 
obviously banking on the sensation that would result when it be- 
came known that the President of the Reichsbank wrote popular 
“hits” in his spare time. Although my friends pointed out that a 
former Prussian Minister of Education had written the verses of 
the song Grad’ aus dem Wirphaus komm’ ich herons (I’ve just come 
out of the Inn) for a volume of students’ drinking songs, I was 
dead against that sort of cheap publicity and refused to allow 
my Spielmannslied to be published. 



Part Four 


FIGHTING REPARATIONS 



CHAPTER TWENTY-EIGHT 


The Reichshank from the Inside 

T he holiday which I took in the spring of 1925 had been 
well earned. Also, after the Reichshank successes of the 
previous year, I believed that quieter times might lie ahead. 
During the period immediately following the events of 1924 I 
concentrated my energies on the internal development of the 
Reichshank, doing ever3rthing in my power to maintain and con- 
solidate the traditions of devotion to duty, diligence and service 
to our clientele. Every member of the Reichshank was imbued with 
this sense of tradition. 

The fact that we trained the oncoming generation under our 
own roof constituted by far the most helpful element. It is true that 
the board of management included several administrative legal 
experts who had joined us from outside. Beyond that, however, the 
higher grades were staffed by those who had graduated from the 
lower ranks. Anyone entering the Reichshank as a young man had 
the chance of becoming a member of the board. Within this 
Imperial institution the truest democracy reigned. Whoever came 
through his probationary period successfully was assured of 
a job for life. The same held good for the subsidiary staff who 
were not engaged in actual banking — the messengers, menservants 
and runners who were grouped under the heading of Geldasahler, 
Among them, too, tradition and appearance were maintained. They 
wore liveries of blue cloth with gilt buttons and red collars. Many 
of them had come to us from die Imperial Household after the 
dissolution of the Empire, and they were frequently called upon to 
assist at official functions. They knew exactly how to treat guests, 
how to look after the cloakrooms, handle china and wait at table. 
It was not unusual for other authorities and even private individuals 
to “borrow” some of our Geldsdhkr for their parties. Among these 
hosts, later on, was Adolf Hitler, who regularly fell back on men 
trained in our Bank or in the Imperial Household. 

Although these GeldaaMer were not eligible themselves for an 
actaal banking career, such openings were available for their 
children. There were several instances where the sons of some of 
our GeldsShler embarked on academic careers and even occasion- 
ally attained to some of the highest positions in the Reichshank 



The Rdchsbank from the Inside 223 

itself. The Geldzahler attached to my anteroom, Leben by name, 
had mastered so many subjects in English and French as a result of 
private coaching that I was able to take him with me regularly as 
my personal attendant when I went abroad. Not only I, but all of 
us concerned in the management of the Reichsbank, made a point 
of helping conscientious and efficient members of the staff to get on. 

Our oncoming generation increased to such an extent that each 
new Didtar — ^the name given to beginners — had to have two years’ 
practical business experience before we accepted him. The age 
limit for a new entrant was twenty-six. At first he was on probation 
for a period of several months, after which he had to pass a test 
before being transferred to the permanent staff. This probationary 
period also enabled us to form an estimate of his character and 
personal behaviour. The teat was arranged by a commission 
consisting of high-ranking Reichsbank officials. 

Once the applicant had passed his test and had been accepted, a 
career in the intermediate grade lay open to him as bank inspector, 
rising to senior inspector. After a few years, if he were sufficiently 
ambitious to desire promotion, the bank would grant him three 
months’ study leave on full pay, at the end of which he would take 
his test for the higher grades (which once again was arranged by a 
commission consisting of leading members of the Reichsb^ank). If 
he passed he became a Bankrat and could work his way up to a seat 
on the board. During my term of office quite a few members of the 
board had risen from the ranks in this way. A previous academic 
or non-academic education did not matter in the least. The whole 
of this democratic system was based not on political or social 
position but simply and solely on ability and character. 

To this principle and its application I gave my enthusiastic 
support, firstly by being readily accessible to every member of the 
staff, from the charwomen and the office boys upwards, secondly, 
by persistently encouraging all my colleagues to express freely 
any criticism or disagreement whenever I discussed any proposed 
measures with them. “Yes-men” who confined their remarks to 
“Yes, sir”, “Certainly, sir”, “Of course, sir”, never got any 
further with me. On the other hand, if anyone put forward a well- 
thought-out, well substantiated contention or suggestion he could 
count on my support knowing that such questions as length of 
service, etc., carried no weight with me. When Herr von Glasenapp 
retired and I had to appoint a deputy I chose a colleague who had 
risen from the ranks. When he too retired under the age limit I 
appointed the youngest member of the board without meeting 
with any appredabk objection from my more conventionally 
minded associates. 



22^ My First Seventy-Six Years 

In addition to personal questions I turned my attention to any 
technical improvements which might serve to facilitate inter- 
course between the business world and the Reichsbank. Of these, 
one of the most essential was the introduction of the telegraphic 
system of monetary transfers. The vital importance of such a rapid 
transfer system for monetary policy in general was forcibly brought 
home to me after the collapse. In the case of transfers from one 
German town to another (duringthe years before the transfer system 
between the provincial Central Banks resumed its normal work- 
ing) four, five or even six days would elapse between the payment 
by the transferor and the crediting of the amount to the transferee. 
This meant that such sums were out of circulation for days at a 
time, being held up by the delay in transfer from one account to 
another. When one tlunks that in peacetime the Reichsbank was 
wont to handle several milliard marlcs a day one can picture the 
loss in interest occasioned by this dilatory system. The technical 
difiiculties of the transfer system were considerable, because the 
question of security and abuse had to be carefully taken into 
account. These difficulties were, however, overcome, and it was 
possible, after the introduction of the telegraphic Giro, to transfer 
any sum within two hours from, e.g., Berlin to Munich or any 
other destination. 

I never troubled about the technical execution of current trans- 
actions. My colleagues dealt with the assessment and allocation of 
loans. It may sound absurd, but I have never handled a single 
Reichsbank bill ; and I have studied precious few documents. My 
desk was always empty. Years previously I had occasion to call on 
my predecessor, Havenstein, and found him submerged under 
piles of documents. I agreed with Harriman, the American railroad 
magnate, who was once shown over a banlc in Vienna, including a 
room where a man was busy working, surrounded by piles of 
papers. On enquiring who this man might be and being told that 
he was one of the managers, Harriman exclaimed: “Impossible! 
A manager should be able to sit with his feet on his empty desk and 
smoke a leisurely cigar!" The chief item on my desk was my ash- 
tray and, next to it, a small bronze statuette of Frederick the Great 
under whose aegis the Reichsbank was founded. 

In dealing with those problems which did concern me I 
received admirable support not only from my colleagues on the 
board but also, first and foremost, from the Economic and Statistical 
Department, It had an extensive library, avoluminous collection of 
scientific material and a first-rate staff of sound political economists. 
This department had been established by my former enemy, von 
Lumm, and I must hand it to him unreservedly that it was a model 



The Reichsbank ft'orn the Inside 225 

of its kind. The head of the department in my time was Dr. 
Nordhoff, an outstandingly conscientious and meticulous man and 
a pastmaster in all currency matters. On countless occasions during 
the course of years I have had to speak on currency and political 
economy to audiences small and large. I invariably went through 
the material for my speeches with the staff of the Political 
Economy Department, and as invariably asked Dr. Nordhoff for 
his criticism, 

“You are the keeper of the bank’s conscience, Dr. Nordhoff. 
Don’t let anything pass that isn’t absolutely foolproof.’’ 

“You know you can rely on me, sir.’’ 

Our official residence was immediately nejrt door to my office 
and was looked after by the bank’s domestic staff in exactly the 
same way as the offices. It frequently happened that I would 
suddenly come upon a workman or mechanic engaged upon some 
job in our home of which I had no previous knowledge. If by 
chance I ran across one of these unexpected visitors when on my 
way to the bathroom in my pyjamas and dressing-gown, as often 
as not I would be told: “The porter sent me up ’ere to see to that 
bad pipe in the central ’eatin’. There’s a leak somewhere, but 
I'll fold it all right.’’ We had practically no real privacy. 

Although the number of business callers certainly grew no less, 
I made it a rule never to keep anybody waiting if I could help it. 
All appointments were punctuaUy observed. If an unexpected 
visitor turned up without my having earmarked any time for him, 
Fraulein Steffeck would come in and plead: “Go and see him 
for a minute or two an3rway— just to shake hands.” Her tact and 
kindliness helped to make her a favourite with everyone. 

The arrangements for our social life I was content to leave in my 
wife’s most capable hands. She would tell me of her requirements 
for the evening, and all I needed to do was to give the necessary 
instructions. Perhaps there were guests staying in the house ; or 
she was giving a musical party at which Margarete IClose would 
sing, with Michael Raucheisen as accompanist. Or again, we wanted 
tickets for the Opera, for the Kurfiirstendamm Theatre, for the 
Schauspielhaus, with a party of so-many friends. Our daughter 
would have invited some boy and girl friends and there would be 
dancing. Ministers, bankers, foreign visitors, diplomats, came and 
went. Our evenings in Berlin were nearly always booked up with 
some kind of sociS function. Often, too, they provided an oppor- 
tunity to discuss economic and ffixancial problems after we had left 
the dinner-table. 

Our domestic staff was well trained, but there were nevertheless 
occasions when they found themselves at a loss. Among our guests 

8 * 



226 


My First Seventy-Six Years 

one evening was the Papal Nuncio, Pacelli, the future Pope. He 
was in full canonicals and, after the maid had taken his cloak, he 
extended tiis hand with the episcopal ring for her to kiss. But the 
good soul— -a staunch Evangelical from East Prussia — ^hadn’t the 
least idea what she was supposed to do and quite cheerfully shook 
the Nuncio’s hand. He chuckled with enjoyment when he told us 
of the incident later. 

After conditions in Germany had become more settled, the 
Government began to encourage a certain amount of social life. 
The President and the various ministers gave parties and dances 
which, outwardly at least, scarcely differed from the receptions of 
Imperial days. It was of course first and foremost the duty of foot- 
men and stewards of the household to see that everything went 
“according to plan’’, but most of them had remained in their jobs 
and been taken on by new employers in these more modem times. 
Tme, the dresses were much simpler and plainer than of old, and 
the subjects of conversation provided an even greater contrast. 
But in spite of a good many gaucheries, and slips, at which mem- 
bers of the old aristocracy looked down their noses, one was con- 
scious of a general effort to re-establish a decent representative 
social order. 

Many ministers of middle-class origin, and especially their wives, 
conducted themselves in a manner that can only be described as 
both dignified and attractive. Foremost among them were the 
President and Frau Ebert, and the unassuming fashion in which 
they took their changed circumstances for granted put to shame 
many members of pre-war society. My wife was once present 
during a conversation that took place at a reception. Someone was 
expressing admiration for one of Giotto’s paintings in the Pitti 
Galley in Florence, and Frau Ebert observed how much she too 
had liked it. One of the other ladies was tactless enough to ask if 
and when the President’s wife had seen the picture, to which 
Frau Ebert smilingly and quietly replied: "When I was a lady’s 
maid and went to Italy with my employer.” 



CHAPTER TWENTY-NINE 


Some Economic After-Effects 

W HEN I left the General San Martin at Hamburg at the 
end of our Mediterranean cruise I anticipated a period 
of less strenuous effort. Unfortunately, however, things 
didn’t work out that way. The birth of the new Reichsmark had 
been successfully accpmplished after hard labour, but there 
remained a good few after-pains. 

Barely a fortnight after my return, I received a visit from the 
heir to a big industrial combine whose founder had died the pre- 
ceding year and who was very anxious to discuss his financial 
situation with me. He showed me the balance-sheet of his total 
assets. The figures were imposing, though they showed a heavy 
indebtedness. Nevertheless there was a considerable surplus of 
assets over liabilities, in spite of which I could only assume that 
he wished to go into the matter of his debts. 

“ I am glad ”, I began, “that you have managed to preserve the 
large fortune that your father left you. I take it you have come to 
see me on account of your debts?” 

“As a matter of fact, sir, I’m dreadfully worried about them,” 
“Tell me some details.” 

“Among my liabilities are ninety million marks in bills of 
exchange and I haven’t the necessary liquid resources to repay 
them.” 

“Well, I expect there’s a way out.” 

“Unfortunately it isn’t as simple as all that. You see, these 
liabilities are payable not in marks but in pounds sterling.” 

“You aren’t trying to tell me that you owe bills of exchange to 
the tune of ninety million marks payable in pounds sterling! Who 
in Heaven’s name granted you such vast credits in pounds?” 

“I had it from several London banks.” 

“When do the bills fall due?” 

“In fourteen days,” 

I found it difficult to conceal my irritation and astonishment. 
“I know that you have inherited a heavy burden; I can also 
appreciate your probably not wanting to part with any of your 
property. If, however, you could only maintain that property at 
the price of such a crushing burden of debt, then it was an absolute 



228 My First Seventy-Six Years 

duty to realize some of your assets and provide for a liquidity which 
would have saved you from landing yourself in such a hole as this.” 

“You must realize, sir, that I was not able to put this vast 
inheritance in order so soon after my father’s death. Also, I had to 
consider my family’s feelings ; they would have raised objections 
even to a partial splitting up of our family property— out of regard 
for our father’s memory, which is easily understood. For that same 
reason, too, I have tried to keep the property intact.” 

“I do understand that very well, and I sympathize. What I 
cannot understand — ^in my capacity as guardian of German cur- 
rency — ^is how you could have incurred such a large proportion 
of these debts in foreign currency. To pay out ninety million 
marks in pounds sterling today — z year after stabilization — ^is no 
light matter, even for the Reichsbank.” 

"My English banker friends were always willing to grant these 
credits. But I fully realize now that I should not have allowed my- 
self to borrow so much from abroad. The only thing I can do now 
is to apply to the Reichsbank for help.” 

And what could I do but tackle the business myself I A failure of 
the combine — even if due not to over-borrowing but simply to 
shortage of cash — ^was something I could not permit in the interests 
of German economy and its newly-regained credit-standing abroad. 
I called a meeting of the four or five big German banks that dealt 
with the combine, persuaded them to grant the credit of ninety 
million marks and to co-operate in realizing part of the business. 
The Reichsbank, on the other hand, furnished the equivalent of 
ninety million marks in pounds sterling. The entire amount was 
settled in London on the date the bills fell due, to the great sur- 
prise of the City undertakings concerned. Heavy and unwelcome 
as this sacrifice was for the Reichsbank, it was amply repaid by the 
impression created in London by this prompt settlement of so 
large a sterling commitment. It was a further proof for other 
countries that the Reichsbank was in complete control of the ex- 
change situation and of the economic position of the Reichsmark 
in international trade. 

The whole business afforded me the opportunity not only to 
press for the limitation of long-term foreign loans, but also to go 
into the question of the short-term loans granted by foreign 
coimtries to German industrial firms, insurance companies and 
banks. 

^ During friendly conversations with some of the managers of the 
big banks I ascertained that the latter accepted current short-term 
loans amounting to considerable sums from foreign banking 
friends. The equivalent of these sums in Reichsmarks was loaned 



Some Economic After-Ejfects 229 

out to the banks’ clientele. These transactions were carried out with 
the best of intentions on both sides. The foreign bankers were very 
glad of the higher rates of interest which they were able to obtain in 
Germany for their money; but many of them were also honestly 
anxious to be of assistance to German industry; and the German 
banks who accepted these foreign monies must certainly have 
been even more encouraged by this goodwill. I was prompted, 
however, by motives that extended beyond these more business- 
like considerations on the part of the banks, I therefore pointed 
out to some of the directors the particular dangers that I dreaded. 

“You tell me ”, I said to one of them, “that you have received 
hundreds of millions in short-term foreign money. If, due to some 
unexpected circumstances, you were suddenly asked to repay these 
amounts the Reichsbank would not be in a position to furnish 
them in foreign currency. Your colleagues in the other banks have 
also accepted similar amounts and, like yourself, rely — quite 
wrongly — on the Reichsbank in the event of a sudden demand for 
repayment. You are aware that, out of the incoming foreign bills, 
the Reichsbank has to pay out two milliards a year to the Repara- 
tions Agent. The remaining stocks of gold and foreign bills would 
therefore never suffice to meet demands such as you would be 
compelled to make in such circumstances.” 

“I see, sir ; unfortunately you are right. I will discuss the matter 
with my colleagues on the board. I am wondering whether we 
ought not to try to change our short-term foreign liability into a 
long-term loan through the issue of bonds.” 

“I would far rather you cut down a good proportion of your 
short-term foreign borrowing in general. But for the moment your 
suggestion would appear to be fairly opportune.” 

The result of these conversations was that some banks did 
actually issue bonds and raise a long-term loan abroad, with the 
proceeds of which they repaid their short-term foreign obligations. 

But if I was still able to appreciate the desire of the banks to 
assist German industry by means of loans from the proceeds of 
foreign monies, I entirely failed to understand the action of several 
banking establishments who placed such proceeds at the disposal 
of the Stock Exchange for speculative security guarantees. It 
seemed to me monstrous that Stock Exchange gambling with 
foreign money should be maintained at the Rei^bank’s expense. 
Again and again I warned bank directors by word of mouth to put 
a stop to this scandal. I urged the banks to request their customers 
to deposit a good part of their money for the purchase of securities 
with the bank and therefore to effect such purchases on a purely 
cash basis. On one occasion I even went so far as to exclude from 



230 My First Sevmty~Six Years 

clearing-house business one of the big banks who had failed to 
comply with Reichsbank regulations — a measure that quickly 
brought it to its senses. Since, however, none of this really did any 
good, at the beginning of May 1927 I compelled the banks to 
exercise a drastic curtailment of overdrafts to those of their 
customers holding securities. Unfortunately the banlis gave notice 
of this measure without previously coming to an agreement with 
the Reichsbank and the sensational surprise led to a considerable 
drop in the prices of securities on the Berlin Stock Exchange on 
Friday, 13 th May. 

This day went down in the history of the Berlin Stock Exchange 
as “ Black Friday”. Once again I was attacked from all sides. While 
I deplored the clumsy manner in which the measure had been 
carried out, the measure itself was a necessity. It probably contri- 
buted to the fact that the Stock Market disaster in New York two 
years later caused less damage on German ’Change than would have 
been the case had I allowed speculation to continue unchecked. 

On the evening of that same Black Friday” my wife and I were 
at a party in Potsdam. I sat next to our hostess who in the course 
of conversation told me, with every sign of distress, that she had 
suffered heavy losses on the Stock Exchange that day. 

“But my dear lady, how did you incur such losses? What 
securities have you?” 

She mentioned several very sound shares. 

“But these are all first-rate securities. If they really did drop 
today their value as shares remains unaffected. And their price 
will rise again.” 

“But Dr. Schacht, I simply haoe to sell.” 

“Why is it so absolutely necessary that you should sell?” 

“Well, you see, I bought my shares with a loan from the bank 
and now have to find the money. And as I haven’t the cash I am 
obliged to sell these securities.” 

“My dear Mrs. Blank, if you do things like that I’m sorry I 
can’t help you. There’s a little rhyme over the entrance to the New 
York Stock Exchange which is worth no tin g; 

He who sells what isn’t his’n 
Must pay, or else he’ll go to prison.” 

“Black Friday” did not increase my popularity. Neither did my 
tight against foreign loa^ bring me any sympathy from the per- 
petually hard-up politicians and business-men. Moreover, I had 
formally and completely retired from politics in 1926 because, in 
the matter of the so-called Fiirstenente^ung (expropriation of the 



Some Economic After-Effects 23 t 

Princes) the German Democratic party had ranged themselves 
against the protection of private property. It is true that they 
abandoned this line after some consideration, but I had no wish to 
become involved in any changing political programmes. 

Under the Dawes Plan the President of the Reichsbank held 
office for a term of four years instead of for life. My first four-year 
period ended in the autumn of 1928. When the question of my 
re-election came up for discussion certain left-wing papers had 
managed to spread the rumour that I was suffering from intesti nal 
trouble which would make it impossible to accept re-election. 

In defending myself against attack I have always relied more on 
deeds than on words. I tfierefore called up my daughter who was 
studying at Heidelberg University: “The annual congress of the 
Verein fur Sozialpoliti% (Union for the Study of Social Policy) is 
being held next week in Zurich. I have said I will go and wondered 
if you would care to come along.” 

My daughter was delighted, packed a suitcase and attended the 
congress with me until the weekend. From Saturday midday until 
early Monday morning there were no meetings. We got into a car 
and drove at top speed from Zurich to Lauterbruhnen in four 
hours and just caught the last train for the Eiger Glacier station. 
There we spent the night, about 5,660 feet up, after we had had a 
drink or two and danced a little and, incidentally, run across Frau 
Stresemann who happened to be staying there. 

Next morning we took the first train to the Jungfraujoch, got 
out our ice-axes, had ourselves roped together by die guide and 
started to climb to the top. I was fifty-one years old at the time 
and had done no climbing for more than twenty years. In spite of 
this I cannot say that I foimd the ascent more difficult than my 
daughter did. Only once, when crossing a crevasse, did the guide 
have to come to my assistance. Visibility was poor, but the lovely 
scenery didn't matter to me as much as my prowess as a moun- 
taineer. I even found the mist quite pleasant on the ridge just 
below the summit, as to look into the abyss on either side might 
have made me somewhat unsteady. 

We had reached the summit from the Joch in three hours. I was 
not in the least tired, neither was my heart affected. Indeed, I was 
as fit as a fiddle, despite a difference in altitude of nearly ten thou- 
sand feet in under sixteen hours. After a short rest we descended, 
were back at the Jungfraujoch for lunch, caught the three o'clock 
train for Lauterbrunnen and sat down to supper in our Dolder 
Hotel in Ziirich. 

Like everyone else who has climbed the Jungfrau, I had received 
the customary official certificate. I had it framed and hung in my 



232 My First Seventy-Six Years 

anteroom at the Reichsbank, so that every caller could form his 
own opinion as to my state of health. The rumours soon died down. 

In 1926 I acquired a property about seventy miles north of 
Berlin, not far from Rheinsberg and Neuruppin. Giihlen, with 
its well-wooded grounds, surrounded by lakes, became in truth a 
source of recreation for me. Time and again, when the day’s work 
proved unusually trying I would call to mind my Giihlen motto : 

No trouble so heavy, but Giihlen doth feel it, 

No wound goes so deep, but that Giihlen doth heal it. 

No attack is so sharp, but that Giihlen defeats it. 

No joy so profound, but that Giihlen completes it. 



CHAPTER THIRTY 

Clouds on the Horizon 

T he purchase of Giihlen soon proved itself to have been a 
wise and far-sighted move. A man in my precarious, semi- 
economic, semi-political position needed a home outside the 
capital ; a fortress to which he could retire if the number of his 
enemies should become too great. 

During the years following the inflation my part as President 
of the Reichsbank appears to me to have been first and foremost 
that of watchdog, keeping a sharp eye on our currency and seeing 
that there was no drop in market quotations. I took careful note of 
every slightest shift in the money market, every striking quotation 
below par of the new German mark. Any multiplication of danger 
signals meant prompt intervention on my part. Today it seems to 
me only natural that I did not alwa3rs resort to gentle methods 
and that my opponents in the open market — ^who thought only 
of their personal advantage and never of the general welfare — 
should avoid me. No one defending a cause in which he believes 
will be able invariably to confine himself to soft words and kindly 
warnings. 

In order to ensure tliat Germany intended to pay her reparations, 
the Dawes Committee had installed reliable confidential agents in 
the Reichsbank and other German business establishments. These 
men, working under Parker Gilbert, the Agent for Reparations, 
practically controlled Germany’s ability to pay. It was their job to 
see that the reparations instalments were pimctually remitted. 

But were we actually in a position to remit payments on repara- 
tions — ^to transmit over two milliard German marks aimually in 
foreign currency? We were not. Nevertheless we did it. And we 
did it by first borrowing from abroad the monies which we later 
paid out abroad. 

Other nations lent us money — ^but through whom? The 
politicians ? Certainly not. The politicians were engaged in vote- 
catching in their own countries, by promising their electors that 
Germany would pay vast sums in reparations. Economists and 
business-men were wiser, more far-sighted than the politicians. 
They saw the great danger that threatened if a land such as oum 
was barred from international competition. They recognized that it 



234 Seventy-Six Years 

would be healthier and more intelligent to give Germany an 
economic chance. At that time men like Montagu Norman did 
more for peace than any party-political leader whose “theme 
song”, when addressing his followers, continued to be ; “ Germany 
Must Pay.” 

In The End of Reparations (1931) I have furnished an exact 
statement of account of the money that flowed into Germany and 
the money that went out of Germany again during the six years 
following the inflation. Even then I spoke quite frankly of the 
spoils that had fallen to the other nations after the war, in the form 
of German property, viithout their being set down under the head- 
ing of “reparations”. They amounted to enormous sums. The 
German colonies alone, which were allotted to “mandatories”, 
represented a value of eighty to one hundred milliard marks. 

But the politicians were not satisfied: they wanted hard cash 
as well. So they continued to extort their annual reparations 
payments. 

The ultimate victims of this procedure were the foreign lenders. 
They loaned money to German firms, public companies, corpora- 
tions, municipalities and towns. The Reichsbank exchanged these 
foreign remittances (bills of exchange) for German money; the 
bills of exchange, however, constituted the funds from which 
reparations were transmitted. In this way the foreign politicians 
obtained the money which foreign private capitalists had supplied 
to Germany in the form of loans and credits. 

This method involved the newly-revived German economy in 
the most enormous burden of debt — ^for, with the long-term and 
short-term loans we assumed responsibility not only for the 
ultimate repayment of these amoimts, but had also to pay current 
interest on them. To the reparations was added the interest on 
foreign loans. 

Readers will now understand why, soon after I took over at the 
Reichsbank, I started to warn the public against excessive borrow- 
ing abroad, especially for such things as swimming-baths, public 
pleasure grounds, libraries, sports grounds. In peacetime these 
are all signs of increasing prosperity, but they were not at all 
appropriate to our country, impoverished and crushed by war and 
post-war conditions. 

But, as has always happened in history, my warnings did not 
tend to make me popular. Under its new political status — a 
Republic instead of an Empire — Germany had disintegrated into 
numerous small States, communities, districts, provinces, each 
competing furioiwly with the other in borrowing. 

Along with this change, the party-membership-book began to 



Clouds on the Horizon 


235 

play its part, and often enough replaced qualifications, efficiency, 
professional training. Party interests were a significant factor in 
the acceptance of foreign loans. Party representatives vied with one 
another in who could do most “for ^e people Whoever achieved 
the most obtained most votes. 

This combination of personal and general arguments, supposed 
to benefit everybody, took place quite openly. That, however, did 
not mean that the public saw through the little game. On the con- 
trary — each individual considered, from his own little standpoint 
alone, how the money from these foreign investments could help 
to raise the German standard of living. Collective liability without 
personal responsibility is a very dangerous game, which could not 
eventually remain hidden from Parker Gilbert, the Reparations 
Agent. He realized that Germany’s payments of reparations were 
not genuine, that the country was paying her debts not with honest 
export surpluses but with borrowed money. It could only be a 
matter of how long it would take before Germany was no longer in 
a position to remit foreign currency. 

The recognition of this fact led to a new conference, this time 
under the chairmanship of the American, Owen Young, who had 
already played a significant part in connection with the Dawes 
Plan. The Young Conference, which gave birth to the so-called 
Young Plan, met in the spring of 1929. The whole of 1928 was 
devoted to preparations for this conference. 

As early as 1927 there had been a session of the Friedrich-List 
Society, which I will briefly describe, for on this session fell the 
shadows of those coming events which were eventually to be 
brought up for general discussion by the Young Conference. 

The chairman of this particular session was Professor Bernhard 
Harms of Kiel — successor to that Professor Hasbach under whom 
I had taken my doctor’s degree a quarter of a century earlier. Pie 
was immensely proud of his “Institute for the Study of World 
Economy’’ at Kiel, and especially of the fact that this Institute 
possessed jubilee histories of and monographs on nearly all the 
big German industries and factories. On one occasion when I 
visited him in 1934 I pulled his leg a little by questioning the 
completeness of his collection. He pretended to be hurt; but I was 
able to mention three firms whose histories, as it turned out, were 
not included in it! 

On a summer’s evening ini 1927 in Bad Pyrmont we were sitting 
comfortably together discussing Germany’s economic problems, 
when I suddenly asked Professor Harms to turn round and read-- 
out loud — ^the inscription on the mantelpiece. He did so, and amid, 
general merriment read: 



2^6 My First Seventy-Six Years 

“A pathway strewn with roses and oblivious to all harms . . 

"That doesn’t apply to me,” was his quick-witted rejoinder, 
"otherwise there should have been an apostrophe after ‘harms’.” 

In connection with this session and in my capacity as President 
of the Reichsbank, I held a semi-officid position within the 
Government. I did not, therefore, contribute any public state- 
ments but made them to a closed circle of invited members of the 
Friedrich-List Society, among whom were representatives of the 
Frankfurter Zeitung and the Berliner Tageblatt. Both these papers 
had lent a helping hand when the German Democratic Party was 
founded in 1918. When, later, I left the Party they ranged them- 
selves against me. Nevertheless, I believed that their representatives 
would recognize the difference between public statement of opinion 
and a private conversation. As matters turned out, however, my 
confidence was misplaced. 

The main point of all my arguments in 1927 was that I cate- 
gorically rejected the principle that there was any justification for 
the payment of reparations as much from an economic as from a 
political and moral viewpoint. I declared that I looked upon it as 
my duty to press unflinchingly for the removal of reparations; 
thk I could not simply stand by and see the standard of living of 
German workers permanently lowered as the result of an annual 
burden of milliards of marks. 

Owing to a breach of confidence my words found their way to 
Paris and were destined later to play their part. 

The year 1928 was taken up with preparations for the Paris 
Conference which was intended to re-regtdate Germany’s repara- 
tions debts. A great deal of detailed work was necessary ; and a full 
share of it fell to the Economic and Statistical Department of the 
Reichsbank. 

The Young Conference opened in Paris in February 1929, at 
the Hotel George V, a new luJtury building better known to the 
younger generation as the place where Rita Hayworth always stays. 

The atmosphere was distinctly more friendly than at the Dawes 
Conference five years previously. In those days the shadow of war 
still affected those present. The German representative (myself) 
had been obliged to occupy a kind of stool of repentence in the 
centre of a horseshoe, rather like a prisoner in the dock facing his 
accusers instead of actually taking part in a conference with them. 

Now we all sat at the same table, the Germans among the rest — 
Americans, British, French, Belgians, Japanese. 

* Play on the name, one meaning of which actually is “Harm”, 
damage. 



Clouds on the Horuon 


237 

The President of the Reichsbank (myself) led the German 
delegation which, in addition, consisted of Vogler, General 
Manager of the United Steel Works and his deputy, Privy Coun- 
cillor Kastl, of the National Association of German Industrialists, 
and my own deputy Melchior, of the Hamburg banking establish- 
ment of Warburg & Co. In my immediate entourage were Director 
Blessing and my secretary, Fraulein StefiFeck, of the Reichsbank. 

America was represented by Owen Young and Jack Morgan, 
the great son of the even greater Pierpont Morgan. On the French 
side was M. Moreau, President of the Central Bank. 

Our interpreters were a first-rate Belgian, the somewhat excit- 
able German, Michaelis, and the quite outstanding Paul Schmidt, 
who has recently achieved fame with his vivid book Statist auf 
diplomatischer Buhne (A “Super” on the Diplomatic Stage). 

In Paris, the German delegation occupied the Hotel Royal 
Monceau within easy distance of the George V, We had travelled 
in four Mercedes cars which had been placed at our disposal by the 
Stuttgart Automobile Works. 

An amusing incident happened soon after we arrived, I found 
I had forgotten to pack my shaving soap, so I said to Fraulein 
Steffeck : 

“Would you be very kind and go to the Louvre and get me a 
stick of shaving soap?” I meant the Magastn du Louvre, the big 
Paris department store. 

As our German chauffeurs were strangers in Paris she took a 
taxi, told the driver, “Louvre” and vanished. After a long — a very 
long — ^time she returned, having searched in vain for shaving soap 
among such works of art as the Mona Lisa and the Venus de Milo. 
In the meanwhile I had shaved and had started work. 

The conference was focussed on two main questions. First, the 
level of the amounts that Germany would in future have to find 
to meet her annual pajiments of reparations. Second, what pro- 
portion of this amount could be transmitted in foreign currency 
without damage to the German economy. 

The last question was the decisive one. 

As leader of the German delegation I had prepared my plan of 
action. First of all I would endeavour, through the submission of 
thoroughly comprehensive material, to persuade the conference 
to reduce the amount of reparations as much as possible, before 
proceeding to the question of transmission. The long-drawn-out 
discussion of this material soon led to a certain amount of exhaus- 
tion. Jack Morgan was the firstjto take a few days off which he 
spent cruising in the Mediterranean in his yacht. But the other 
participants also felt the need of relaxation. 



238 My First Seventy-Six Years 

Since Easter was now approaching I considered that we Germans 
too were entitled to a few days breathing-space. I suggested, there- 
fore, that each of the Allied experts should state the lowest demand 
he was in a position to make on behalf of his country. The sug- 
gestion was accepted, and enabled me to talce a week’s holiday 
with my wife visiting the castles of Touraine in the wonderful 
valley of the Loire. 

When my colleagues and I met again at the conference table 
after my return from this trip, I discovered that my proposal had 
had the most astonishing result. The Allied representatives had in 
fact not once contacted each other on the subject of the amounts 
they had been asked to suggest. Each of them obviously feared the 
reproaches of his friends should his greed outstrip all limits. So it 
came about that, when the American chairman asked that the 
figures be made Imown and these figures were added up, individual 
demands were considerably larger than the total amount previously 
contained in the Dawes Plan, whereas the whole aim of the 
Dawes Conference was supposed to be to reduce the reparations 
debt. This result, which came as a surprise to each of those 
present, created a sense of bewilderment that ultimately gave way 
to general merriment and afforded us Germans a not inconsiderable 
moral uplift. 

It made little difference, however, to the obstinacy of our 
opponents as the conference proceeded. The French made no 
bones about resorting to underhand Press methods as well as to 
valid arguments. One day I received news from Berlin that every 
French bank with outstanding debts in Berlin had suddenly 
called in these debts, or, if they had been incurred on an instal- 
ment plan or were due by a certain date, had given notice de- 
manding full repayment. The fact that this happened without 
warning on one and the same day and that all French banks were in- 
volved pointed to a concerted action obviously dictated by higher 
authority. 

This action resulted in the rapid decrease of the Reichsbank’s 
reserves in gold and foreign bills, as other banks were obliged to 
call on its stock of foreign bills to cover the repayment of the 
French debts. It was up to me to devise an immediate counter- 
stroke. 

I went to see Parker Gilbert, Agent for Reparations, who was in 
Paris a lot during the conference, and told him what had happened, 
though of course he himself was ati fait with everything that went 
on. If became evident during our conversation that both the French 
and Mr. Gilbert (if the latter had indeed approved the French 
action) were badly out in their reckoning. They had thought to 



Clouds on the Horison 239 

force me into meeting them half-way in the matter of our indebted- 
ness, whereas all they did was to play into my hands and afford me 
further argument against an over-heavy burden of transmission. 

“Do you consider the French action very dignified or politically 
expedient?” I asked. 

Gilbert had no idea what I was getting at. He shrugged his 
shoulders and said: “You can’t really be surprised. The French 
believe you are trying to get out of paying. They are evidently 
trying to show you what that would lead to.” 

‘ ‘ I can tell you in very few words, Mr. Gilbert, what that would 
lead to, and I think the French will very quickly cancel such 
measures. If the calling-in of these — ^not very considerable — 
French debts at German banks creates an obvious menace to 
German currency such as we have seen recorded in the Exchange 
Market during the past few days, and if German currency is 
shaken by the repayment, in foreign exchange, of borrowed 
capital, it is surely obvious that payments of reparations, such as 
the French still dream of, are simply out of the question,” 

Gilbert turned even paler than he usually was and showed signs 
of nervousness. I went on calnaly: “If the French banks do not 
rescind their orders forthwith I shall express my thanks at the 
next session to the French delegation for having given me such 
striking proof of the impossibility of transferring the payments of 
reparations which they still demand.” 

The result of this conversation was that Gilbert said he would 
seek out my colleague M. Moreau, President of the French 
Central Bank, and tell him the gist of my argument. The very 
next morning Gilbert called me: 

“Herr Schacht, in connection with our conversation yesterday, 
I wish to inform you that the French banks are withdrawing their 
notices, I hope therefore that you will consent not to refer to the 
matter again at the conference. I am sure you will agree with 
me that to raise the question would involve everyone in very un- 
pleasant recriminations and react very unfavourably on the general 
atmosphere.” 

I had, of course, to admit as much myself. I was satisfied with 
my success and the subject was not mentioned at the conference. 

My trip through Touraine was the last pleasant episode during 
the Young Conference. The amusing incident of the individual 
demands put forward by each of the Allied countries was preserved 
in a delightful caricature in the French comic paper Le Hire, The 
story had got around very quickly. It was followed by very serious 
discussions within the conference, which was nearing its end. 
Already disquieting clouds were visible on the horizon. 



CHAPTER THIRTY-ONE 

I Sign the Young Plan 

A FTER the failure of the attempt to evolve a new Young 
Plan based on the minimum demands of Germany’s 
jLjL former enemies, the chairman very justly turned the tables 
on us. 

“Now,” he said, “it is up to the German experts to tell us what 
they think they can manage.” Which was only to be expected. 
To the question, when would we be able to submit a German 
memorandum, I replied: “At tomorrow’s session.” 

We worked on that memorandum the entire afternoon of that 
day and right through the night. We were clear enough in our 
own minds as to the contents but it had now to be formulated and 
set down in absolutely watertight fashion. 

Pimctually the following morning we submitted our memoran- 
dum in German and English. It had been compiled by the four 
German experts working in complete accord with the officials who 
had been seconded to our delegation. I won’t go into details of 
the amounts we quoted: they were still too high. But for the time 
being, and the whole political situation being what it was, we could 
not possibly hope for the cancellation of reparations. It seemed to 
us more important to discuss those circumstances which would 
most strongly affect Germany’s ability to pay. 

This memorandum led to an explosion which set the entire 
political pack on our heels. The cause of the excitement was the 
sentence; “The loss of the Eastern Provinces handed over to 
Poland had reduced Germany’s food-growing areas to such an 
extent as seriously to impair Germany’s solvency.” Whereupon 
the enemy Press immediately set up a howl: “Herr Schacht 
demands the return of the lost Eastern Provinces!” 

No less dust was raised by a second atgument in this memoran- 
dum. We had written that we should have been in a position to 
increase our payments, but for the seizure of our colonies which 
deprived us of the chance of procuring raw materials from over- 
seas with our ovra currency. 

“Dr. Schacht wants the German colonies back!” yelled the 
enemy Press, by whom both instances were misrepresented, dis- 
torted, misinterpreted. Today there is no one who can fail to 



I Sign the Young Plan 241 

admit the validity of our arguments. As a matter of fact we had 
made no demands — wt had only offered explanations and stimu- 
lated consideration. 

The day on which we submitted our memorandum saw the 
beginning of the developments which led to my resignation from 
the presidency of the Reichsbank eight months later. 

Had the antagonistic Press in Allied countries been the only 
source of attack we could have dismissed the whole business with 
a shrug. But as so often happened in German history, it was our 
own country that stabbed its own representative in the back. 

The experts working on the Young Plan had been chosen on the 
express condition that they voiced their own opinions independ- 
ently of their respective Governments. This was undoubtedly 
done in order to avoid the impression that there was any intention 
of imposing another dictated arrangement on Germany. That 
much wisdom at least had been acquired in the past ten years. 
The various Governments were thereby encouraged to send their 
best brains to the conference ; for without general instructions only 
the best brains could be expected to arrive at conclusions which 
would comply with their Government’s outlook. 

Towards the end of May I had revisited Germany in order to 
form an impression of the general atmosphere. This personal 
visit had proved necessary because in Paris we were unable to 
speak freely over the telephone. Hardly had one of us lifted the 
receiver and asked for a German number than the French table 
d’icoute (listening-in, or tapping service) cut in. It was like a fore- 
taste of future Gestapo methods. I was partly irritated, partly 
amused by this restriction on my personal liberty. Directly I 
heard the click of the eavesdropping service I would say in French : 
“All right, table d'ecoute, you can clear the line. I shall most 
certainly say nothing that could possibly interest you.” 

An exchange of ideas with Germany was therefore possible only 
by letter which travelled safely by diplomatic courier, or by 
means of personal visits. 

Of course what we had foreseen came to pass: the Allies con- 
sidered our figures far too low. So Owen Young, the chairman of 
the conference, sat down and worked out a compromise suggestion 
half-way between the Allied figures and ours. The fact that the 
chairman himself sponsored this suggested compromise invested 
it with a corresponding importance and made a decision imperative. 

During my visit to Berlin at the end of May I ascertained that 
the German Cabinet was by no means unanimous in regard to 
this suggested compromise. Above all the Central Party deputy, 
Stegerwald, raised serious objections. The Minister, Wirth, on 



243 My First Seventy-Six Years 

the other hand (slender, of medium height, fond of a drink, 
actually not a significant figure in German politics), tried to per- 
suade me to shoulder the entire responsibility for the Young Plan 
figures. His view was that I should exonerate the Government 
from any responsibility in the matter. 

“ Somebody’s got to stick their neck out”, he remarked drily. 

To which I replied in the same vein: “It won’t be my neck, 
Herr Wirth.” 

All this was sufficiently depressing and unpleasant, but there 
were other factors, positively mortifying to the German partici- 
pators in the Young Plan. The German Government did not 
hesitate officially to disown me as the spiritual parent of the Paris 
memorandum. 

I am speaking here only of bare facts without reference to any 
undercurrents. It is a fact that while we in Paris were wrestling 
for every German mark, Severing, the Prussian Minister of the 
Interior (German Socialist Party), declared in a public meeting 
that Germany could well afford an annual payment of two milliard 
marks in reparations. 

It is also a fact that hardly had I submitted my memorandum 
to the Young Conference when Tyrrel, the British Ambassador in 
Paris, addressed an enquiry to the former German Ambassador, 
Kiihlmann (who was on a private visit to Paris) and protested 
against the so-called political demands which — according to him — 
I had made. Ktihlmann had been our last Foreign Minister during 
World War I ; he was not a cool* but a very gende, not to say weak, 
character, and had simply forwarded Tyrrel’s complaint to Berlin 
without comment and without telling me. Stresemann, misin- 
formed, thereupon declared to various Allied representatives that 
Schacht had no right to make such demands. 

No one took the trouble to enquire exactly what had been said 
or written. The country failed us at the outset and left us in the 
lurch. This lack of consistency seemed even more incomprehensible 
abroad than it did to us. But they realized now, of course, that I 
was fighting a losing battle, not only against those Allies taking 
p«t in the conference who were out to grab the largest possible 
slice of the German cake, but also against my own Government. 

Meanwhile the conference had dragged on for nearly four 
months and the time was approaching when we had to come to a 
decision. I returned to Paris and, together with Vbgler, called on 
the chairman of the conference. We told him we were prepared 
to agree to the Plan as based on Young’s proposals, but that we 

• A play on the name KShlmamt — cool man. 



I Sign the Young Plan 243 

were obliged to put forward certain conditions. Immediately 
following this conversation we received the ofBcial telegram from 
the Government urging us to agree to the Plan, which practically 
terminated the conference. The Young Agreement was signed in 
Paris on the 7th June 1929. 

It would probably be impossible in any other country for a 
delegation entrusted by its Government with important decisions 
affecting foreign policy and endeavouring to safeguard the nation’s 
interests, to be hampered in its efforts by Party strife in Parliament 
and Press, We were not to escape this misfortune. The Left was 
quite frankly prepared to accept any payment based on the Dawes 
figures. The Right, as always,. was opposed to any payment of 
reparations. The Vorwarts of nth May 1929 published a very 
biting caricature : Schacht in front, to the left; in the background 
two figures, one bearing a laurel wreath, the other armed with a 
machine-gun. Underneath was the caption: “For us Nationalists 
the Paris situation is clear as daylight. If negotiations fail, Schacht 
gets a laurel wreath, if he comes to terms with our enemies — a 
machine-gun at the ready.” This caricature goes to show that the 
tension in men’s noinds had scarcely relaxed at all since the murder 
of Rathenau, 

The decision to agree to the Young Plan was not, of cotirse, an 
easy one for me. 1 still considered the payment of reparations 
absolutely impracticable from an economic point of view, even 
under the Young Plan, and I expressed this conviction clearly 
when the conference met in full session for the signing of the 
agreement. If, nevertheless, I did sign, it was because I was con- 
vinced that diis economic impracticability would very quickly 
become apparent and compel the reopening of negotiations. The 
Young Plan was in fact ratified by the respective Governments 
in March 1930, and the Hoover Moratorium for reparations was 
declared as early as June 1931. 

It stands to reason that 1 had not overlooked the political conse- 
quences attendant on Germany’s Vefusal to approve the Young 
Plan. On our willingness to sign depended the withdrawal of 
Allied occupation forces from the Rhmeland, and the improve- 
ment of the entire international atmosphere. 

Those four months in Paris were by no means spent entirely 
sitting in my room at the Royal Monceau and stewing over docu- 
ments. The Mimchener Jllustrierte Presse published a very neat 
caricature of my day’s work: reading the daily papers while still in 
pyjamas and dressing-go^; off to the conference in hat and coat; 



244 My First Seventy-Six Years 

poring over columns of figures and documents the whole day long ; 
in the evening attending a reception in tails and boiled shirt — 
such, according to the artist, was “a day in the life of the President 
of the Reichsbank, Dr. Schacht”. 

But it was not always a case of tails and boiled shirt in the 
evening. Paris is large and dress suits are worn only on official 
occasions. I can add a little to the Munchmer Illustrierte. None of 
us working in the Delegation missed the chance of getting to 
know the French capital better. At first my colleagues thought 
everything was wonderful — ^the French food, the wine that went 
with it, the whole atmosphere of the city. Later, when they had 
become used to it, they realized what I had known for a long time, 
that the food at the Royal Monceau was appalling. We frequented 
the dining-room less and less. The many difficulties that cropped 
up during the conference tended to make us more and more irrit- 
able. Constant nightwork on the papers we had brought with us 
to Paris in twenty-seven packing-cases, the complete lack of under- 
standing displayed by those at home, one thing after another — 
and by the end of our stay we were sick to death of that lovely city. 

Perhaps I personally suffered more than the others from the 
underground tensions which became more and more apparent 
with the passing of time. My policy of exhaustion began to take its 
toll of me as well as of everyone else. On one occasion I was so fed 
up that I left the Royal Monceau at a moment’s notice and moved 
out to Versailles for a week. Then I returned to the others. 

But to recall only unpleasantness would be to exaggerate. There 
were many attractions — ^Montmartre for instance. Two people 
initiated me into its mysteries; Madame Eliat, wife of the Paris 
head of the Deutsche Bank, and the ever spruce Nicolaides, a 
Greek royalist whose uncle was formerly President of the Greek 
Central Bank. 

Madame Eliat would often call for me and we would stroll in the 
Bois de Boulogne ; or we would drive a little way out of town to 
such places as Fontainebleau, Versailles, and the marvellous Forest 
of Compi&gne. Madame was thirty-five years old and well known 
as a writer. 

With her or with Nicolaides, sometimes also with one or two 
French members of the conference, I would look in at Chez 
Marianne in Montmartre or at the Casanova Bar, or a little cabaret 
where agifted Russian member of the conference would improvise 
verses in three languages about well-known visitors. He had 
probably been an officer in the Imperial Army. Paris at that time 
was full of Russian emigres. 

Nobody who knows my weakness for versifying will be surprised 



J Sign the Young Plan 245 

that on one occasion I tried my hand at it in French. This memento 
of an enjoyable evening would have been forgotten long ago had 
not a correspondent of the Easier Nachrichten happened on it in 
1947 and resurrected the whole story. On the 26th April 1929, 
according to him, I wrote in the visitors’ book Chez Marianne : 

Voilk ce que je pense ; 
a cette conference 
on a perdu balance ; 
j’ai cassd ma lance, 
et je n’ai plus de confiance, 
mais je garde I’esperance. 

Underneath were the signatures also of Leon Barthou and 
Philippe Berthelot. Barthou was President of the Reparations 
Committee ; Berthelot was in the Foreign Office. According to the 
Easier Nachrichten both had written their names under this six- 
line effort, of which the translation runs : “What do I think of this 
conference ? Well, everyone seems to have lost his balance. I have 
broken my lance, my confidence has vanished, but I still have 
hopes.” 

Incidentally there had appeared on the same day a caricature 
in the Petit Parisien, the largest French daily, wilJi the caption 
A la manUre du Dr. Schacht (Dr. Schacht’s Method) : the tenant, 
to whom the gasman has handed an account, said crossly; “I 
can’t pay all that. Tell the gas company I shall make counter- 
proposals.” The line “Dr. Schacht’s Method” was obviously 
intended to give French readers the impression that Germany 
had received from France something for which she refused to pay. 
Not an entirely accurate rendering of the state of affairs. 

I much preferred a caricature which had appeared in Aux 
£c(yutes the previous week: “Schacht is amused.” I have included 
it in this book. The reader may decide for himself what it is 
(according to French views) that amuses me. 

Despite these pleasant memories, however, the general impres- 
sion of that conference period in Paris is somewhat gloomy. I 
remember especially a controversy with my colleague M. Moreau 
of the French Central Bank. At a critical stage in the Young 
negotiations he suddenly reproached me with the words I had 
uttered in confidence to that intimate circle at the P3ninont 
Assembly in 1927, and referred to the occasion of that conference. 
My opponents had obviously transmitted my observations to 
France. 

“Herr Schacht, I regret that you do not mean to come to an 
understanding here,” exclaimed Moreau. “Did you not declare 



346 My First Seventy-Six Years 

in Pyrmont two years ago that you did not intend to pay any more 
reparations?” 

I did not let myself be put out of countenance and replied in the 
same tone ; 

“What I think, M. Moreau, about the justification or otherwise 
of reparations is something we do not need to discuss here, but 
how can you assert that I have no intention of pa)dng when we have 
just made you an offer of more than one milliard six million marks 
per annum?” 

He had no answer to that. But the thought that once again I had 
been denounced by my own countrymen rankled for a long time. 

The final wording of the Young Agreement dragged on until 
the 6th June. The formal signing took place the following day in the 
Hotel George V. 

I think everyone was aware of the “historical significance” of the 
hoxir — ^including, presumably, the Fates. Scarcely had we appended 
our signatures to the document and, as usual, congratulated our- 
selves on the mischief we had once more set in motion, than the 
curtains in one of the windows suddenly caught fire and burst into 
flame. The fire spread to the other curtains. The servants, however, 
rose to the occasion, tore down the flaming curtains and rolled them 
up tightly, so that the fire was extinguished. But the impression 
remained unforgettable. It did not augur well for the stability and 
permanence of our work. 

Another bad omen arose over the resignation of my colleague 
Vogler. In consequence of the fact that a Young Plan was about to 
be accepted, the amount in question was, naturally, discussed all 
over Germany and aroused strong opposition, particularly in 
legal circles and in heavy industry. Probably Vogler did not want 
to expose himself to the criticism of his professional colleagues. 
He resigned his position under pretext of an unimportant subsidi- 
diary condition in the Agreement, though until then he had worked 
out every detail with me. His place was taken by the Privy Coun- 
cillor Kastl who, together with me, signed the draft of the Young 
Plan. 

On the day of the signing I was reminded of some words 
spoken by our first-rate British colleague. Sir Josiah Stamp, on the 
first day of the conference. “This is no economic conference,” 
he had said, “but a political one.” It was evident to each of us — 
with the exception of a few fanatics — ^that from an economic point 
of view the Young Plan was completely crazy. The decision whether 
or not to sign did not depend on the economic workability of the 
Plan. The question at issue was whether one was justified in refus- 
ing to sign, since to do so would give rise to the danger of serious 



I Sign the Young Plan 247 

new political entanglements; or whether, having signed, one 
should continue steadily to resist reparations in general until the 
occasion arose which would enable them to be put an end to once 
and for all. I had decided in favour of the second method. The 
Plan contained a number of paragraphs and clauses which, if 
cleverly handled, could be turned to considerable advantage. 
All that mattered now was that German politicians should take 
the experts’ advice as the starting-point of their own policy. But 
they did no such thing. They remained precisely as vacillating, 
as weak, as they had been during our deliberations. 

In Germany the political discussion on the Young Plan continued 
to run its course. It was one of the links in the series of struggles 
against the burdens under which German economy continually 
groaned and which grew heavier and heavier especially when, in 
the autumn of 1929, the first signs of the approaching international 
economic crisis appeared in America. This crisis developed to an 
intensive degree within the German economy and led to that de- 
flation which in turn resulted in the collapse of the existing Ger- 
man political parties. Had Germany refused to subscribe to the 
Young Plan it could have made no difference to this critical develop- 
ment: rather it would have most certainly had a detrimental effect 
on the situation. 

The whole comprehensive problem inherent in the Young Plan 
negotiations confronted me once again in all its crass stupidity. 
I had gone straight from the Young Conference to join my wife at 
Marienbad. She greeted me on the station with the words: “You 
ought never to have signed I” 



CHAPTER. THIRTY-TWO 


A Far-Reaching Idea 

T he Young plan differed from- the Dawes Plan in certain 
definite details. The Agent for Reparations disappeared from 
Germany. Instead, the responsibility for the transmission 
of payments now rested with the Germans, but a protective clause 
had been inserted for revision in case of emergency. The annual 
sum payable on account of reparations was reduced by an average 
of half a milliard marks. The mortgages in favour of the Allies 
which had hitherto been placed under foreign control as security 
for payments of reparations were released. All foreign controlling 
bodies were withdrawn. The Reichsbank and the State Railways 
were restored to purely German management. 

When the Dawes Plan was evolved in 1924 it created a profound 
sensation because for the first time, instead of one-sided arbitrary 
action, the reparations problem had been discussed in circumstances 
usually associated with the drawing-up of a contract. At the time 
that had constituted a decisive, fundamental change in international 
politics. The Young Plan included a number of improvements but 
no sensational change, and the chairman of the conference was per- 
petually on the look-out for some idea with propaganda value which 
could be introduced into the Young Plan. I was fortunate enough to 
conceive such an idea which I submitted one day to Owen Young. 

I began by describing the reparations policy from its inception 
down to the present time. Naturally enough I didn’t leave the 
Versailles Treaty a leg to stand on, but I was at special pains to 
explain why it had not been possible to comply with the demands 
of the Dawes Plan and pay the reparations debts out of export 
surplus. Not once in the course of the past five years had we achieved 
such a surplus. Rather, we had met all payments of reparations 
out of the loans made to us by other countries during those years, 
a system which could not possibly be continued for any length of 
time. The interest would increase our indebtedness year by year 
and the loans themselves would not always be forthcoming. It was 
necessary therefore to take decisive action to strengthen German 
export trade in order to achievd a surplus. 

In addition to this general exposition of the situation, I empha- 
sized that the American policy of lavishing loans upon Germany 




Entering the Rei'cltslhink. In the bnch^romid, lus dmffeiir, Riesetj 
who (trove him for many years 




A Far-Reaching Idea 249 

had been an entirely mistaken one. I did not hestitate to point out 
that I had publicly and consistently opposed Germany’s excessive 
foreign indebtedness. Germany was an industrial country which 
even after the war was comparatively well equipped for industrial 
purposes, so that there was no necessity to incur such huge debts 
on that account. The economic history of the past decades had furn- 
ished convincing proof that loans should be used first and foremost 
to help the under-developed countries to make full use of their raw 
materials and gradually to become industrialized. Before the war 
the European capital markets had supplied the funds in connection 
with loans for the economic advancement of the under-developed 
South American and Balkan States and many other overseas 
territories. England, France, Germany, etc., had not been in need 
of foreign loans: on the contrary they had been creditors and 
suppliers of capital to under-developed countries. 

Germany was now an impoverished country and no longer able 
to make loans to others. If the Allies really wished to help her to 
meet her reparations liabilities they should grant loans to the 
under-developed countries, and thereby put the latter in a position 
where they would be able to purchase their industrial equipment 
in Germany. No useful purpose would be served by allowing 
Germany to compete in existing world markets against other 
European industrial states as she had hitherto done. German 
competition in these spheres had been one of the main factors that 
had contributed to the end of world peace and to attempted settle- 
ment by war. The repetition of such a competitive struggle must be 
avoided, or its bitterness at least reduced by seeking to open many 
fresh markets which would afibrd to all industrial countries oppor- 
tunities for employment and for disposal of their goods. Increased 
well-being of all nations was the fundamental economic principle 
by which peace could be preserved and future wars avoided. 

Owen Young was considerably impressed by these arguments 
but almost immediately asked whether I saw any way of putting 
my ideas into practice. 

“I should not be telling you all this, Mr. Young, if I were not 
able to submit a practical proposal for the realization of my object. 
I would suggest that in the Young Plan you assume responsibility 
for all concerned for the joint founding of a bank through which, 
on the one hand, the reparations payments shall be distributed and 
which, on the o^er hand, shall be entrusted with the carrying out 
of finmicial operations offering to the under-developed countries 
the means of exploiting their natural resources and increasing their 
agricultural products. This financial aid will enable these countries 
to purchase all industrial equipment — especially in Germany — 
9 



250 My First Seventy-Six Years 

necessary for increased production. A bank of this kind will de- 
mand financial co-operation between vanquished and victors that 
will lead to community of interests, which in turn will give rise to 
mutual confidence and understanding and thus promote and 
ensure peace.” 

I can still vividly recall the setting in which this conversation 
took place. Owen Young, seated in his armchair, puffing away at 
his pipe, his legs outstretched, his great keen eyes fixed unswerv- 
ingly on me. As is my habit when propounding such arguments, 
I was doing a quiet steady “quarter-deck” up and down the room. 
When I had finished there was a brief pause. Then his whole 
face lighted up and his resolve foimd utterance in the words : 

“Dr. Schacht, you gave me a wonderful idea and I am going 
to sell it to the world.” 

All this happened in the late spring of 1929. Nearly twenty 
years later — ^while still under police supervision and obliged to 
receive my visitors in the modest country inn on Liineburg Heath 
where I had been “confined” by the British — read of a plan for 
world peace put forward by the United States Government under 
President Truman. The idea imderlying “Point Four” of this 
plan — ^which before long was on everyone’s lips — ^was that in 
order to promote universal welfere it was essential to assist those 
countries as yet under-developed with loans and supplies. It was a 
first-rate idea and met with a universally good reception. No-one 
appeared to realize that it was a repetition of my suggestion of 
twenty years previously, although in 1939 it did not stop short at the 
bare suggestion but was formally incorporated in the Young Plan 
which envisaged the creation of a “Bank for International Settle- 
ments ” (B.I.S.). The sentences relating to the gist of my idea ran: 

“Further, since the task of remitting payments in foreign 
currencies together with a reduction in imports necessitates an 
extension of German export trade, we investigated the possibility 
of creating a financial institution which would be in a position to 
contribute to an increase of world trade through the financing 
of undertakings — particularly in undeveloped countries — ^which 
would probably not be attempted with the financial resources 
usually available.” 

Had this statutorily appointed task been carried out, it would 
probably have had considerable effect on the world economic 
situation and contributed much towards a peaceful development. 
Unfortunately, the executive of the B.I.S. did not devote its 
attention to this item of their programme. Under the strong 
influence of the Allies, and especi^y of the French, they confined 
themselves to the adWiistration and distribution of reparations 



A Far-Reaching Idea 251 

payments and to the very useful promotion of co-operation between 
the Central Banks of the various countries. But since payment of 
reparations very soon ceased, their activity in this connection 
dwindled to nothing. The world economic crisis following the Wall 
Street slump of October 1929 also prevented any active measure 
on the lines I had suggested. The critical developments in universal 
political conditions likewise had ahampering effect. Had the B.I.S,, 
when first founded, immediately taken the initiative in the matter 
of financial aid to the under-developed countries it might possibly, 
after the Second World War, have occupied the position that the 
so-called World’s Bank* now does in the U.S.A. The policy of the 
World’s Banknot infrequently encounters political mistrust, where- 
as the B.I.S. would in all likelihood have been spared this adverse 
condition. Even today, however, one need not abandon the hope of 
future collaboration between the B.I.S. and the World’s Bank. 

My Bank for International Settlements remained the finest item 
of propaganda for the Young Plan. Our next job was to tackle the 
working out of the statutes of the B.I.S. Hitherto, all international 
conferences dealing with the German economic and financial 
situation had been held outside Germany. On this occasion I was 
keen that Germany should be included. My suggestion that the 
conference should take place in Baden-Baden was readily agreed 
to by my colleagues. It was the first time that a German meeting- 
place had been chosen. 

We were in Baden-Baden for four weeks in October 1929. In 
spite of several petty discussions the work went pretty smoothly 
and, most important of all, in a completely friendly atmosphere. 
The famous watering-place which had seen so many of Europe’s 
crowned heads, so many aristocrats of both sexes in its well- 
known hotels, was set in a forest ablaze with autumn colouring, 
behind which stretched the endless fir-covered hiUs and mountains 
of the Black Forest. After we had been deliberating for hours on 
end in the conference room at tihe Hotel Stephanie we would 
escape into the mountains in fine weather, up .to Herrenalb or 
Blihler H6he, and relax after the day’s exertions. 

The chairman of the Baden-Baden Conference was Jackson 
Re3rnolds, one of the leading New York bankers. The second 
American representative was Melvin Taylor, head of the First 
National Bai^. of Chicago. The French and Germans were again 
represented by the presidents of their respective Central Banks, 

* The full title is International Bank for Development and Recon- 
struction. 



2^3 My Seventy- Six Years 

while the chief British representative was Sir Charles Addis who 
had spent many years in Shanghai as head of the Hong Kong and 
Shanghai Banking Corporation and was now, among other things, 
a member of the board of the Reichsbank. 

In the meantime, my idea of a Bank for International Settle- 
ments had met with such enthusiastic response from all those 
taking part in the Young Conference that soon there was not one 
among them who would not have liked to claim the suggestion as 
his own. As a result, several of the countries concerned put for- 
ward requests that the bdnk might be established there ; Belgium 
in particular hoped that Brussels would be chosen. For my part I 
felt that the political atmosphere in the western countries vis-k-vis 
Germany had not yet progressed sufficiently to induce me to sup- 
port the Belgian claim, and I therefore suggested Switzerland. 
When agreement was eventually reached on this point there 
remained a minor argument as to whether it should be Geneva or 
Zurich. The matter was finally decided in favour of neither, Basle, 
the pivotal point of Europe, being chosen instead. 

There were no really essential ffifferences of opinion during our 
discussions on the B.I.S. regulations. It was an outside occurence 
that cast something of a blight on the proceedings. Right in the 
middle of the conference there burst the Wall Street crash. 

When Jackson Reynolds approached the breakfast table one 
morning I felt compelled to remark, “Mr. Jackson, you don’t look 
very cheerful. What’s the matter?” 

“Haven’t you seen the despatches from New York?” 

“Of course I have. But surely it won’t hit you very much I” 

“Unfortunately it hits me very seriously as I have large com- 
mitments on Wall Street.” 

A few minutes later Mr. Taylor came in with a beaming face, 
waving his daily wire from New York. 

“Seen the reports from New York, Dr. Schacht?” 

“Certainly. How has it hit j/ow?” 

“It hasn’t hit me at all. When I left New York for Europe on a 
visit of several weeks I sold all my securities like the far-sighted 
man I am.” 

Jackson’s face grew longer and longer, Taylor’s grin broader and 
broader. 

Both Reynolds and Taylor were great favourites as colleagues; 
but Taylor was the more cheerful nature while Reynolds took 
things somewhat more seriously, though he was, too, an exponent 
of real American humour. In 1927 I was a guest with Sir Charles 
Addis at a dinner given in New York in our honour, and it was 
Reynolds who made the after-dinner speech. We knew from Addis 



A Far-Reaching Idea 253 

that he (Reynolds) had fathered no fewer than thirteen children, 
which was the crux of the anecdote he introduced into his speech, 
something like this: 

“I come from a little village out West where we seldom had 
any great opportunities of outside entertainment. One day a 
circus came along and among other attractions there was a drome- 
dary which gave rise to a lot of talk for, as everyone knows, there is 
no such thing as a dromedary in America. One of our farmers went 
up to the box-office and asW the cashier if he couldn’t buy his 
tickets at less than the usual price. The cashier naturally asked why 
he thought he was entitled to such a privilege, to which the farmer 
replied: ‘My family is so large that I just can’t alford tickets for 
all of them at the ordinary price, but I would like all of my chil- 
dren to see the dromedary.’ Whereupon the cashier asked, ‘How- 
ever many children have you?’ ‘Thirteen’, answered the farmer 
proudly. The cashier shot out of his seat in astonishment. ‘Thir- 
teen children! Gee! Wait a minute while I go and fetch the 
dromedary so’s he can have a look at them!’” 

New York is inclined to take itself seriously and Jackson was a 
typical New Yorker. Taylor on the other hand was atypical Middle- 
Westerner, invariably good-humoured and with the best intentions 
in the world. At that time, when Prohibition was the law in the 
United States, Taylor’s home town, Chicago, was the headquarters 
of all bootleggers, Chicago was *‘wet” and fairly prided itself on 
defying and evading the existing prohibition laws. 

Taylor himself preferred a good bottle of German wine or a 
glass of Munich beer to apple juice. His birthday, as it chanced, 
fell on a conference day, so I bought a large bottle of the best Black 
Forest Kirsch, tied a bunch of roses on the neck and presented 
the whole thing with a card on which I had penned the following 
verses to be sung to the tune of Yankee Doodle : 

“A Yankee boy is trim and tall 
And never over-wet, sir, 

But prohibition, after all, 

Is what he least aims at, sir. 

Yankee Doodle, guard your wit, 

Yankee Doodle, Dandy, 

Don’t think it fair to prohibit 
Black Forest Cherry Brandy,” 

Taylor was delighted with his present. “I swear to you Dr. 
Scha^t, I’ll get this bottle through the Customs without any 
bother,” he declared. ‘‘My friends in Chicago shall also enjoy it.” 



254 Seventy-Six Years 

He was as good as his word. A year later I was in Chicago during a 
lecture tour. Taylor took me to a party where he told the Baden- 
Baden story in his best manner. 

There was another amusing incident when the conference ended 
and we had all signed. Journalists from every country had, of 
course, been present during the whole time we had been in session 
and their numbers increased considerably as the conference drew 
to its close. All were eager to transmit the decisions of the confer- 
ence to their respective newspapers and news agencies as quickly 
as possible. 

Jackson Reynolds, however, as chairman, adopted a curious 
attitude. He declared that he must first of all deliver the report of 
the conference to the presidents of the Central Banks of the partici- 
pating countries before he himself could communicate its contents 
to the Press. That would have meant that the report would have 
had to be sent by post to New York, Tokyo, etc., and that the wait- 
ing journalists would only then have been able to take cognizance 
of it. This aroused a storm of opposition among the journalists, but 
curiously enough Reynolds refused to budge. 

Then one day I received a visit from Louis Lochner, well known 
to me as the Berlin representative of the Associated Press. 

“Dr. Schacht, for days and weeks past we have been waiting 
here for the outcome of the conference. It’s surely out of the ques- 
tion that we should be sent home now without being informed 
of the result. The public everywhere is interested in it and now 
we are supposed to leave empty-handed. It just won’t do. Please 
help us to get hold of that report.” 

I thought the matter over for a few minutes before replying. 

“lam not in a position to raise any objections to the chairman’s 
perfectly correct attitude ; aU the same I’ll do my best to help you.” 
Then I went to Reynolds. 

“Mr. Reynolds, I understand perfectly that, as chairman, you 
feel obliged first of all to deliver the report to the presidents of 
the various Central Banks. Naturally you won’t object to their 
handing the report to the Press. As president of the Reichsbank I 
would ask you, if you will, to hand me the report ofiicially. I will 
not conceal the fact, however, that I intend to pass it on immedi- 
ately to the Press.” 

Reynolds smiled and said : 

“Obviously I cannot refuse your request. Dr. Schacht. You 
have every right to receive the report. If you on your part will 
assume responsibility for communicating it to the Press that is 
yotu- own affair and outside my province. I herewith officially hand 
you the report.” 



A Far-Reaching Idea 255 

We parted with friendly smiles and Lochner secured his report. 

At a Press banquet some time later Lochner recounted this 
incident in the course of his speech as a tribute to my understand- 
ing of a reporter’s requirements. I myself was only reminded of the 
affair when my wife told me how, in 1945, when she had been 
without news of my whereabouts for montla and I was in Ameri- 
can custody, she had turned to Lochner in Berlin, among others, 
to ask if he knew where I was. Lochner sent his secretary into the 
anteroom where my wife was waiting with the message that as the 
wife of a “war criminal” he was unable to receive her. 



CHAPTER THIRTY-THREE 


I Resign from the Reichshank 

E ver since 1926, when I resigned from the Democratic 
Party, the leftist Press had adopted an unfriendly attitude 
towards me. It was not merely the fact that, in contrast to a 
certain section of the Party, I stood firmly by the invulnerability 
of private property. I was persona non grcAa in Liberalistic circles 
by reason of events such as that ‘ ‘ Black Friday ’ ’ which showed that 
I was not disposed to allow speculation to flourish unchecked. In 
addition, my pronounced German and social attitude on the ques- 
tion of reparations was something which got on the nerves of the 
opportunist politicians. And finally, my persistent warning against 
the luxury spending of public money, notably by municipal 
authorities, did not tend to increase the number of my friends. 
Even in 1930 when the impending financial catastrophe was 
already clearly recognizable I was openly attacked by left-wing 
politicians for my denunciation of the way in which municipal 
authorities continued to incur debts abroad. As a responsible 
banker I was opposed to anything that looked like a gamble. 

Their hostility reached its climax when I found myself compelled 
to talse a stand against the German Government’s treatment of the 
Young Plan. 

As in the case of the Dawes Plan six years previously, the Young 
Plan contained a clause to the effect that the Plan must be accepted 
or rejected in its entirety. Under no circumstances whatever could 
this or that point be excluded. The experts of all the Governments 
concerned had insisted on this clause. So that when — after the 
experts had subscribed to the Plan — several foreign Governments 
began to make changes and to modify individual points in the 
Plan, it would have been the simplest thing in the world for Ger- 
many to refuse to have anything to do with such proceedings. All 
the experts would have been obliged to support her and it would 
have been difficult for individual Governments to raise any 
objection. 

Instead, the German Government actually entered into negotia- 
tions with the Governments of Poland and some other countries 
over some very important changes in the Young Plan. The fact 
that the German experts — ^including of course myself — ^were not 



I Resign from the Reichsbank 257 

informed of these intended changes turned an act of folly into a 
piece of wanton mischief. It was solely due to the indiscretion of 
some Government officials who were friends of mine that I 
gradually became aware of these goings-on after my return from 
Baden-Baden at the beginning of November 1929. Only a few 
weeks previously I had supported the Government when, together 
with men like Severing, I had signed the proclamation against the 
popular demand — ^instigated by the German National Party — ^for 
the rejection of the Young Plan. Now I had to look on while the 
German Government not only abandoned the Young Plan to 
which I had been a co-signatory, but did not even condescend to 
inform me of its intentions. That was the reason why I prepared a 
memorandum on the impending deterioration of the Young Plan 
which I not merely submitted to the Government on the 6th 
December but published in the Press on the same day. It came 
as a bombshell. 

In this memorandum I pointed out that we German experts had 
agreed to the figures in the Young Plan only with the utmost 
reservation. Now, however, the Germans were .being asked to 
waive claims to property and payment of supplementary sums 
which were fully justified and which far exceeded anything 
included in the Young Plan. The Plan provided for the replace- 
ment of all Germany’s other commitments by the amounts 
determined in the Plan. (This was the so-called “all-inclusive 
amounts” clause.) It would be contrary to the provisions of the 
Young Plan for Germany to make voluntary payments or to forgo 
claims to which she had formerly been entitled. This sentence 
referred specially to an agreement with Poland on the subject of 
liquidation in which Germany waived her claim to compensation 
for national and Government property ceded to Poland. In Paris 
we had raised strong objections to this waiver and had succeeded 
in carrying our point. Germany was also expected to forgo 
several hundred million marks which, according to the Young 
Plan, were hers by right, being the proceeds of the liquidation of 
requisitioned German property. I concluded the memorandum 
with a statement that such an adulterated and debased Yoting 
Plan was something to which I could never agree. 

The memorandum aroused great excitement. The tension 
between the Government and myself increased and a further event 
served only to intensify it. 

Before the Young Plan was signed we experts had explained to 
the German Government that we would sign only on condition 
that the said Government would agree to institute drastic financial 
reforms. Hermann Muller, the Social-Democratic Chancellor, had 

9 * 



2^8 My First-Seventy-Six Years 

expressed his agreement and Hilferding, the Minister o£ Finance 
(likewise a Social-Democrat) had also signified his assent. Unfor- 
tunately the exchequer was so depleted owing to extravagant 
financial policy that in December the danger arose that it might 
not be able to meet the salaries of the Civil Service. Once again, 
without telling me, Hilferding arranged with an American banking 
syndicate to grant a short-term loan. In the course of negotiations, 
however, the American banking firm thought it necessary to enquire 
from the Reichsbank whether the latter were in favour of the 
granting of such a loan, to which the Reichsbank replied in the 
negative. I informed Hilferding of the Reichsbank’s attitude in 
this matter and at the same t im e told him that I did not intend to 
let him down, but was willing to recommend the granting of a 
German bank loan of some hundred million marks if the Reichstag 
would pass a corresponding law guaranteeing repayment of the 
loan in three equal consecutive annual instalments, and if the 
Government would abide by its promise to carry out the proposed 
financial reforms. 

To the Chancellor, of course, this stipulation was somewhat 
unwelcome, but he was sufficiently reasonable and intelligent to 
support my demand. The left-wing majority in the Reichstag were 
furious with me but they could not eventually refuse to pass the 
law I had asked for just before the Christmas recess. The fact that 
the measure was known as Lex Schacht (Schacht’s Law) showed 
that the general feeling towards me was definitely the reverse of 
friendly. 

In this way the temporary shortage of cash had been relieved, 
but the position of the Finance Minister had become xintenable. 
Hilferding resigned and with him also Popitz, his Secretary of State, 
who gave as his reason; “I consider this interference in national 
politics on the part of the President of the Reichsbank to be 
intolerable.” I did not resent Popitz' attitude which, from his point 
of view, was quite understandable; and later we resumed our 
friendly footing. 

Hilferding’s post was filled by Moldenhauer, member for the 
German People’s Party, an easy-going cheerful Rhinelander given 
to looking on the bright side of fife. By a coincidence we all met, 
a few days after his appointment, at a New Year’s Eve party in the 
house of some mutual friends. Someone asked Moldenhauer what 
a Finance Minister actually did, to which he replied jatmtily in his 
rich dialect: 

“ I spend the whole day governing till my head fairly spins.” 

But I must admit that Moldenhauer knew his job and was fully 
alive to his responsibilities. 



I Resign from the Reichsbank 259 

The holidays at the end of the year were quiet and undisturbed. 
Our daughter Inge became engaged to Herr van Scherpenberg, 
Legation Secretary at the Foreign Office, and we fixed the date of 
the official betrothal party for the 12th January 1930. But politics 
were in full swing during the first days of January and swept me 
along in their wake. At the beginning of the month the Govern- 
ments concerned met in conference at The Hague to ratify the 
signing of the Yoimg Plan. Notwithstanding my memorandum of 
the 6th December and my differences with the Ministry of Finance 
and the Reichstag, and although I had received no information 
whatever as to the Government’s intentions, they invited me to 
come to The Hague as soon as the negotiations had started. I 
didn’t see myself going there as a mere onlooker or yes-man 
and I had not been included in any consultations. I asked to be ex- 
cused on the plea of my daughter’s engagement party; but on 
the 13th January I did arrive at The Hague — another “ thirteenth” 
which was destined to play a significant part in my career. 

Our daughter’s party was the usual festive affair of its kind. 
Guests came and went through the beautiful rooms of our official 
residence, which were filled with flowers and little souvenirs of the 
occasion, and resounded for hours on end with the buzz of lively 
conversation. 

At The Hague I was compelled to realize that all my efforts to 
see the Young Plan through in its original form were fruitless. 
Neither Curtius, the Foreign Minister, nor Wirth, the Minister of 
the Interior, nor Moldenhauer, the Minister of Finance, were the 
men to put up the necessary resistance to the Allied demands. 

Personally, I had no intention of going against my convictions. 

I stated frankly that if the proposed detrimental modifications to 
the Young Plan were accepted I should be forced to consider, in 
my capacity as President of the Reichsbank, whether or not I would 
take up the post in the International Bank at Basle which had been 
provided for in the Young Plan. For the Government, of course, 
that was a hard nut to crack. Moldenhauer tried to talk me round. 

“Herr Schacht, you must know the difficulties your attitude is 
creating for the Government. I venture to suggest — would you 
perhaps not consider it more fitting were you to resign your 
position as President of the Reichsba^?” 

It must be remembered that, according to prevailing Reichsbank 
law, the President could not be officially deprived of his post 
before his term of office had expired. It is also worth remenabering, 
however, that this proviso did not date from the beginning of 
foreign influence such as, e.g. tiie Dawes Committee of 1924, 
but from a German law of 192Z establishing the Reichsbank’s 



26o Seventy-Six Years 

independence of the Government. Personally, I have always main- 
tained that a proviso which stipulates that a Reichsbank president 
cannot be removed from office is politically intolerable, the more 
so as prior to 1924 the office of president had been a life tenure. 
When, in the autumn of that year, I drew up the new constitution 
of the Reichsbank with the Dawes Committee, I endeavoured to 
strengthen the connection between the President of the Republic 
and the office of President of the Reichsbank as much as possible. 
My immediate reply to Moldenhauer’s suggestion expressed this 
view. 

“ I shall resign my position, Herr Moldenhauer, if the President 
of the Republic urges me to do so ; but certainly not at the desire 
of a temporary Government.” 

Moldenhauer glued himself to the telephone and suggested to 
Meissner, the Secretary of State, that the President should express 
the wish that I should resign my post. He must have been some- 
what taken aback by Berlin’s reply. Meissner said he would 
never dream of even mentioning such a suggestion to the Presi- 
dent, since the President was not likely to act upon it under any 
circumstances. 

Government lawyers were then roped in. The Allies were 
assured that a German law would be passed which would compel 
the President of the Reichsbank to join the Bank of International 
Settlement (B.I.S.). One or two journalists asked me whether I 
would comply with such a law to which I replied : 

“I am far too loyal a citizen to refuse to obey a German law. I 
reserve the right, however, to draw my own conclusions from such 
a proposal.” 

The position was hopeless. On the 3rd March 1930 I submitted 
a written communication to President von Hindenburg in which 
I had set down my views. On the 6th March I had a long talk 
with him during which I once again repeated all my reasons for 
opposing the deviations from the Young Plan. I explained that 
I personally could not assume responsibility for the consent to 
such a worsening of our position. I begged him therefore to 
appreciate the cause which led me to place my resignation in his 
hands. 

The trend of our conversation is best shown in the follovsdng 
letter which President von Hindenburg sent me the same day: 

, My dear Mr. Reichsbankpresident. 

I am sorry to learn from your communication of the ^rd inst. 
and our conversation of today’s date, your decision to resign your 
responsible position as President of the Reichsbank. As I have 
already told you, I deeply regret your decision. Since, however, my 



I Resign from the Reichsbank 261 

attempts during today’s conversation to induce you to remain in 
office have been in vain, I must accept your decision as irrevocable. 

To my request that you should at least postpone your resigna- 
tion you replied that you would fix the date of your departure 
in agreement with the Soard and the General Council of the 
Reichsbank, and that it made no difference to you whether your 
resignation took effect in fourteen days or three months; and 
I note here also that you promised to inform me of your eventual 
decision. 

Further, in the course of today’s discussion you agreed to 
comply with my request not to give to the public the same reason 
for taking this step that you have given me in your letter; but 
that you reserved the right to choose what form it should take, 
as you felt it was your duty to lay before the public the real reason 
for your decision. I therefore reiterate my appeal to your patriotism 
and sense of responsibility, and my urgent wish that you will put 
before the public some other reason for your departure than that 
given at the end of your letter. I would especially ask you to delete 
5 ie arguments relating to the “freedom of action” which, in 
your opinion, w'aa granted by the Young Plan to the creditor 
nations, among which you expressly include Poland. To my way of 
thinking this is a misinterpretation which has so far been advanced 
only by the extreme Opposition, but has not been supported by the 
French Government. Consequently it would be in the highest 
degree regrettable and prejudicial if you were to represent the mere 
statement received at The Hague (on a matter wmch moreover is 
justified under International Law) as a possible first step towards 
the imposition of fresh sanctions. I would likewise ask you to 
omit the observation at the end of your letter on the danger to our 
currency and the hints as to the possibility of fresh inflation, for 
such remarks, coming from so prominent a quarter, would prove 
highly injurious to our economy, causing flight of capital and 
difficulties in regard to loans. 

I shall have occasion later to remember your valuable and out- 
standing work for Germany and your services to our country, 
when your decision — ^which I so greatly regret — ^has become an 
established fact. 

Please accept this expression of my highest esteem and regard, 
and believe me. 

Yours very sincerely, 

von HINDENBURG 

It goes without saying that the second part of my letter giving 
the reasons for my retirement was altered for public consump- 
tion. I had no intention of creating unnecessary difficulties for 
the Government. Unfortunately I suffered thereby, because my 
retirement was sometimes misunderstood even by well-intentioned 
people. Today there is no longer any reason for concealment. 



262 


My First Seventy-Six Years 

When the Hoover-Moratorium came into operation the Young 
Plan perished— barely fifteen months after its birth. 

The Press and the Reichstag blamed me for making things 
unjustifiably hard for the Government, to which Moldenhauer, 
the Minister of Finance, replied in the Reichstag in very honourable 
and dignified fashion: 

All our dealings with Schacht have been carried out on a 
thoroughly amicable basis, and I personally have never had any 
serious disagreements with him. . . . Dr. Schacht’s action is 
consistent with his feeling that he can no longer accept responsi- 
bility for the Young Plan. No one can dispute the fact that it is 
causing the Government a certain amount of temporary embarrass- 
ment. ... I regret his retirement but I recognize that he has 
chosen the one path open to a man in his position. 

It will be easily understood tha t I thought a good deal about 
the past years during this time. On the 19th October 1924, a year 
after my appointment, the Federal Chancellor (Marx) had written : 

Prior to the introduction of the Rentenmark on the 15th Novem- 
ber of last year, the Federal Government were in need of the 
responsible co-operation of an outstanding expert on bank matters 
in order to carry out the measures determined by them. In response 
to this need you immediately placed your services at the disposal 
of the public a few days previous to this same 15th November. 
The great importance of your co-operation in the expert accom- 
plishment of the introduction of the Rentenmark, and the mainten- 
ance of the value of the new currency is something which the 
Government acknowledges with appreciation and gratitude. 

With the highest regard and esteem, I am 

Yours most sincerely, 

MARX 

On the 22nd October 1924 my father sent me a letter of congratu- 
lation written in his simple, unpretentious style, which I have kept 
as a memento: 

Dear Hjabnar, 

Mama and I send you our best and most loving congratulations 
on yesterday’s address by the Federal Chancellor. All that I ever 
dreamed of and longed for in my youth, but have never attained, 

I now see realized in you, and together with Mama I rejoice that I 
have lived to see this day. We are proud of you and hope that you 
will enjoy the fruit of your labours for a very long time to come. 

With much love, Your Parents. 



CHAPTER THIRTY-FOUR 


On My Oim 

I DID not find it easy to relinquish my office as President of 
the Reichsbank. In the six years and more during which I 
had been at the head of the bank, relations with my fellow 
directors, my colleagues, and all bank employees had acquired 
such a confidential character as to maintain, if not actually to 
increase, the bank’s esprit de corps which had been famous from 
time immemorial. 

In addition, the policy of the Reichsbank during my term of 
office had been proved advantageous to the German economy, and 
the Reichsbank’s reputation in the international world of banking 
had regained its former high level. We had kept up our connections, 
too, with the remaining principal Central Banks throughout the 
world. 

My professional travels had taken me not only to European 
capitals but also repeatedly to New York, where I had found a 
particularly kind friend and counsellor in the late Benjamin 
Strong, then President of the Federal Reserve Bank. 

Strong was a first-rate connoisseur of finance and banking con- 
ditions in the United States and keenly interested in bringing the 
policy of the American money market into line with that of other 
markets. This purpose was further served by various meetings 
between us Central Bank presidents either in Europe or the U.S.A. 
Our gatherings in the skyscraper building of the Federal Reserve 
Bank consisted of the heads of the Central Banks of New York, 
London, Paris and Berlin. These discussions were invariably 
characterized by complete harmony. 

Even during the period of Prohibition, Strong did not despise 
alcohol. By way of returning Ms hospitality I sent him on one 
occasion a case of the finest (and heacfiest) wine of the Palatinate 
that I could find in all Germany. At our next meeting in New 
York he said, 

“I still have a bottle left of your wonderful wine; you must 
come to lunch and share it vrith me.” At lunch he raised his glass 
and welcomed us. “Gentlemen, this is a marvellous light Moselle 
Herr Schacht sent me.” 



264 , Seventy-Six Years 

I was taken aback for moment, and laughed : 

"Strong, if that’s what you call a light Moselle, I’ll send you 
nothing but real spirits next time.” 

Another amusing incident arose from the fact that the Reichs- 
bank maintained a not inconsiderable gold deposit in the Federal 
Reserve Bank in New York. Strong was proud to be able to 
show us the vaults which were situated in the deepest cellar of the 
building, and remarked : 

"Now, Herr Schacht, you shall see where the Reichsbank gold 
is kept.” 

While the staff looked for the hiding-place of the Reichsbank 
gold we went through the vaults. We waited several minutes : at 
length we were informed : 

"Mr. Strong, we can’t find the Reichsbank gold.” 

Strong was flabbergasted but I comforted him. "Never mind; 
I believe you when you say the gold is there. Even if it weren’t 
you are good for its replacement.” 

One essential problem I had unfortunately to leave unsolved 
when the time came for my return. This was the problem of the 
treatment of foreign loans to Germany. I had steadily and increas- 
ingly warned the country of the dangers of accepting excessive 
amounts in foreign money; I had been very explicit in my pro- 
phecies. In 1927, in a speech at Bochum given at the invitation of 
the Lord Mayor, I raised the question: 

"Are we really to continue to accept some milliards each year 
in foreign loans? I think anyone can easily guess when su^ a 
system must come to an end.” 

It was not only the enormous total of these foreign loans that 
worried me, but the manner in which they were niisspent, notably 
by public corporations. I drew attention to the many extrava- 
gant buildings which a wealthy nation might perhaps have been 
able to afford, but which were entirely unsuitable to Germany’s 
impoverished circumstances brought about by the war and after- 
wards by reparations. 

“I have no hesitation in stating that if the towns had refrained 
from spending such vast sums on non-essentials we should prob- 
ably not have needed to accept a single municipal foreign loan. 
The Reichsbank of course possesses only an incomplete extract 
of municipal accounts, but ^s extract is quite sufficient to show 
that the sums expended by German municipalities on stadiums, 
swimming-baths, pleasure-grounds, parks, ornamental gardens, 
the purchase of land and properties, fair-grounds, banqueting halls, 
hotels, offices, planetaria, theatres and museums, and in the 
granting of loans and engaging in private business etc. — such sums 



On My Chm 265 

amount to a total not far behind the total of the foreign loans taken 
up by the towns.” 

The Reichsbank had vainly endeavoured to obtain a right of 
veto in connection with foreign loans ; the Government was weak 
enough to allow the provinces and municipalities “unlimited loo”. 

In the face of this situation I urged: “There can surely be 
nobody in Germany who will allow autonomy and federalism to 
become an obstacle to a financial and monetary policy which will 
benefit the entire country.” 

Unfortunately I was mistaken: there were many such people. 
As a result, the country’s financial policy was heading for disaster 
and even the international stability of German currency went to 
rack and ruin in 1931. 

A particularly bitter feature of the whole business was the fact 
that, after the collapse of the banking and currency system in July 
1931, public opinion tried to make me responsible for Germany’s 
inability to meet her foreign commitments. The real culprits were 
those political circles and individuals who, despite our continuous 
warnings, permitted the unlimited piling up of foreign loans and 
directed the proceeds of these loans into unproductive invest- 
ments. The likeness to the present situation is obvious. Today, too, 
certain circles are agitating for foreign loans without apparently 
being aware of the responsibilities attaching to them. 

Even the letter written by President Hmdenburg on the and 
April 1930 — ^the day of my official departure — could not dispel my 
anxieties. . 

‘ ‘ When during the fateful days of 1923 you were called to assume 
the responsible position of Commissioner for National Currency 
you played a decisive part in the overcoming of those circumstances 
which at that time constituted Germany’s greatest danger. Among 
those who can claim the merit of having recreated a consolidated 
currency your name will always occupy the front rank. 

“ In the six years and more that you have held office as President 
of the Reichsbank you have always considered it your foremost 
duty to maintain and confirm those things which had been brought 
into being by your far-reaching co-operation.” 

Fair words, honourable words. But alas ! only words, which were 
powerless to avert the danger that threatened the whole of Germany 
and the German people. 

On leaving the Reichsbank my wife and I finally moved out to 
Guhlen, the property I had acquired in 1926. Guhlen is part of 
the little town of Lindow so excellently portrayed by Theodor 
Fontane in his book Wanderungen dvrch die Mark {Wanderings 



266 My First Seventy-Six Years 

through Brandenburg). It lies some 56 miles north of Berlin 
between Neuruppin and Rheinsberg. Its Cistercian monastery 
was formerly well known ; later it became an institution for ladies 
of noble birth and is movingly described in Fontane’s novel, 
Der Stechlin. A few ladies still lived there in my day, with whom 
we exchanged visits from time to time. The tombstones in the 
monastery graveyard bear the names of nobly-born Branden- 
burgers. 

During my student days in Berlin I frequently saw Fontane at 
the theatre where he occupied an eminent position as critic of the 
Vossische Zeitung. My admiration for him personally, for his novels 
and his Wanderings through Brandenburg led me later to acquire, 
at an auction, what to my knowledge is the only oil portrait of this 
great Prussian poet. It is the work of Hanns Fechner and now 
hangs in my study — a reminder of wonderful, vanished days. 

The old Brandenburg song, “Soar aloft, O red eagle, high over 
swamp and sand and over the dark pine forests”, suits Giihlen. 
Here for the most part is typical Brandenburg sandy soil and 
pinewood, and in minor degree sour marshy meadows, pasture and 
agricultural land. What liMe there was was not very productive. 
Giihlen was no lucrative property investment. Once, when my 
daughter was asked where her father’s estate was, she replied: 
“ It depends on the direction of the wind.” It was the less lucrative 
because the greater part had been cleared of timber during the 
First World War, the wood being needed for pit-props. Nearly a 
third of the ground had still to be replanted and had lain parched 
and desiccated since the end of the war. I embarked on intensive 
afforestation and planted at least three million trees. 

Notwithstanding the poor condition of the arable soil and of the 
meadows and pastures I went in also for agriculture, which in- 
volved considerable outlay. With the typical ambition of the 
townsman who wants to “show the farmers”, I succeeded in 
carrying off the prize for milk, while my pig-breeding activities 
soon provided the whole neighbourhood with piglets. 

It was not only the agricultural and forestry work that gave me 
pleasure — ^not even the brickworks which I maintained on a little 
island on the adjoining Gudelack Lake. I derived even greater 
enjoyment from walking and exploring — ^hours and hours in the 
woods, with meadows in clearings and views over the lakes which 
surroimded the property on three sides. 

This unique position was probably the reason for Gulden’s 
plentiful supply of game. I was no great hunter, much preferring 
to preserve, and I always took my telescope when I left my gun at 
home. 



On My Own 367 

In autumn the red deer were regular arrivals and the belling 
of the stags could be heard through the entire house. Among the 
more or less permanent wild population were roe-deer, foxes, 
badgers, rabbits, and the wild boar must not be forgotten. The 
feathered folk included almost every species of hawk, foremost 
among them being the red kite, waterfowl such as herons, mer- 
ganser, duck and diver. Our special pride was a pair of cranes 
which returned every year to their nest in the deep pool. 

In the spring, wild geese and wild swans flew over Giihlen on 
their way to the north, and on one occasion even stayed with us 
for a short while. And once we had some rare visitors — a pair of 
wild swans that nested with us and a pair of real sea-eagles — ^very 
seldom seen in the Mark Brandenburg — ^whereas the fishing-eagle 
regularly frequented our lakes. 

The house itself, framed by ancient oak, elm and pine trees, 
was situated right on the shores of the lake. The previous owner. 
Count Friedrich Eulenburg, had built a smallish dwelling-house 
in the grounds with a separate kitchen about seventy feet away, 
from which meals were sent across by a horizont^ cable line 
because he could not bear the smell of cooking in the house. I 
filled in this seventy feet of empty space with an extension 
connecting the two and containing a living-room and a dining- 
room, with a large veranda running the whole width of the 
building and facing the lake. 

Here, therefore, we took up our abode. Since the official 
Reichsbank car was no longer at my disposal I had to buy a car 
of my own and learn to drive it. It was a small DKW, not much 
to look at, but inexpensive and serviceable. Whatever money I 
could afford to spend I devoted less to my personal comforts than 
to the property. So it was only natural that, in order to establish 
a permanently practicable connection with Lindow, I had about 
one and a quarter miles of roadway paved at my own expense, 
which proved a boon not only to myself but to all the inhabitants 
of the estate and the township. 

We had many visitors at Giihlen— sportsmen, relations and 
friends from our own country and abroad. Nor did I sever my 
connection with the Reichsbank personnel. I had always encouraged 
any sporting activities among the staff, and the rowing club made 
a boating excursion to Neuruppin and spent a foie summer 
afternoon and evening with food and drink on our veranda. 
Political friends, too, were not wanting, and afforded opportunities 
for many profitable discussions. 

During the three years I spent at Giihlen I played no part in 
daily political doings, though I naturally took the keenest interest 



268 


My First Seventy-Six Years 

in all big and important developments. I tried to live a quiet life 
and to remain as much as possible outside public affairs, though 
outward appearances may not have conveyed such an impression 
of the idyllic peace and meditative aspect of rural existence. My 
daughter, in fact, used afterwards to testify to the exact opposite ; 
according to her I would pace up and down the house and garden 
like a caged lion while consuming an endless succession of cigars. 

But her description doesn’t quite fit, Giihlen always did me 
good. 

Actually I had no wish to bury myself in Giihlen. I constantly 
thought and chewed over the question of what I could do, as a 
private individual, to help solve Germany’s problem. The world 
would have to realize that the burden of reparations imposed upon 
Germany was ruining not Germany’s economy alone, but of neces- 
sity the whole world’s trade. When the opportunity presented itself 
in the form of several invitations from abroad, I devoted myself 
to this task of explanation in lectures which took me to Bucharest, 
Berne, Copenhagen, Stockholm and, above all, America, 

My first visit was in response to an invitation from the Rou- 
masian Gevernment to speak in the “ Carolinum” on the German 
economic situation. I held no commission from any oiBEcial German 
quarter but started my lecture campaign on my own accoimt, 
relying solely on my reputation as an expert in currency and 
economic matters. 

It was the first time since the war that, in the spring of 1930, a 
German gave a public talk in the Roumanian capital. The vast 
hall of the “Carolinum”, in which all big artistic and scientific 
gatherings took place, was packed from floor to ceiling. Everyone, 
including the heads of departments, who reckoned himself part 
of cultured society was present. It was during the period of the 
Interregnum, but die Government was represented by the Patriarch 
Myron of the Orthodox Roumanian Church, sitting in the royal 
box. 

Tremendous applause greeted me as I stepped on to the platform 
and began my talk with a brief introduction in French, which I 
followed up with the lecture itself in German. There was certainly 
no one in the hall who did not understand German. 

I began with an exposition of the crazy financial and economic 
conditions imposed by the Versailles Treaty. I pointed out that 
such huge war tributes could be neither raised nor transferred 
without some sort of equivalent economic return; I went into the 
question of the economic crisis which had started first of all in 
America and showed that Ae war had proved injurious alike to 



On My Own 269 

victors and vanquished. The restoration of business relations 
between Germany and South-East Europe was a necessity, 
particularly for the Balkan countries. But one could hope for it 
only when payment of reparations had been done away with and 
the path left clear once more for an equal exchange of goods. 

After the lecture the Patriarch Myron invited me into his box 
and, rising, shook hands with me again and again to the tumultuous 
applause of the audience. 

I took the opportunity during the days that followed to make a 
trip through the coimtry with my friend Radukanu, then Minister 
of Labour in the Maniu Cabinet. We travelled partly by small 
steamer, partly by car. 

Our first objective was the little village of Wulkow, an important 
fishing centre on the northern mouth of the Danube, where we ate 
nearly every kind of fish, boiled, baked, smoked or salted. The only 
dish I declined was caviar ; during the previous days I had been so 
over-plied with caviar at morning coffee, lunch and dinner that I 
was glad to be able to omit it for once. Evening in the little garden 
of the village inn looking on to the Black Sea illumined % the 
setting sun; the endless distance of the surrounding landscape; 
the peace and quiet and the friendly service, all combined to 
make our stay thoroughly enjoyable. 

The following day we drove through the Dobrudja, that much- 
disputed fertile district between the two branches of the Danube 
estuary, inhabited by members of a multitude of the most varied 
races. Radukanu was obviously very keen to prove to me that the 
Dobrudja was an essential part of Roumania. Every time we went 
through a village he would ask the chauffeur: “What kind of a 
village is this?” 

The answer, given in an accent impossible to reproduce, was 
usually devastating : 

“It’s a Grrrreek village. Excellency.” 

At the next village: “Turkish, Excellency.” 

At the third village, which even in externals differed from the 
others in cleanliness and orderly layout, Radukanu put the same 
question. The driver grinned and glanced mischievously at me. 

“German village.” 

I assured Radukanu that I would have suspected as much, 
even without his enquiry. We pulled up and greeted the rapidly 
forming crowd of men and women and fair-haired children in 
German, which had been preserved in its original purity under the 
leadership of the village schoolmaster. 

The fourth village was Bulgarian and only at the fifth stop did 
it transpire that the village was indeed Roumanian, That was the 



z-jo My First Seventy-Six Years 

end of my object-lesson on the ethnographic character of the 
Roumanian Dobrudja. 

Back in Bucharest I was asked whether I would prefer to be 
received in audience by Queen Marie or to visit the petroleum 
district at Ploesti with its perpetually burning oil wells {sonde) 
of Moreni, Notwithstanding my respect for the Royal House of 
Hohenzollern the business-man in me carried the day. I voted for 
the oilfields and in this way beheld a flaming spectacle in the 
midst of a colony of drilling-towers which I had hitherto known 
only from the illustrated papers. 

The gigantic column of flame which radiated a truly frightful 
heat for miles around and was a constant danger to adjoining 
borings, had defied all attempts to extinguish it for the past year 
and a half. It was kept shut off over a wide area by permanent 
guards. Not till six months later was it possible to drive a steel 
block underground into the sonde and cut it off so that the flame 
eventually died for want of fresh fuel. 

In conversations with the leading executives of the various oil 
companies in the Ploesti district I obtained a picture of produc- 
tivity and sales in which German engineers and company officials 
turned their experience to the best possible account. 

Returning to Germany I broke my journey for a few days in the 
German-speaking district of Siebenbiirgen. Only one-tenth of the 
population in this part of Roumania consisted of the “ Siebenbiirger 
Saxons” who had settled there since the middle of the twelfth 
century, but they had managed to preserve their German culture 
and ways and had stamped their imprint upon the entire province, 
In particular the towns bore unmistakable signs of their German 
character. The cormtry got its name from the seven urban settle- 
ments which, jointly and severally, were fortified against the Turks 
with walls and towers. The name “Saxon” simply means “Ger- 
man.” These settlers did not come from Saxony but from the 
neighbourhoods of the Moselle and the Lower Rhine. 

In the few days I was there I met a number of leading Sieben- 
biirger, first and foremost their splendid Bishop Teutsch — ^then 
already advanced in years — ^the tmcrowned but universally acknow- 
ledged head of the Siebenbiirgen Germans. He was also the head 
of the Lutheran Church to which the entire German population be- 
longed, and possessed supreme authority. I had harboured so many 
bitter feelings on account of the inner divisions and lack of stead- 
fastness of character displayed by the home population since the 
coUapse following the First World War — and here was a section of 
the Germ^ people full of honest pride, conscious of their traditions, 
democratic, fearless, held together by their Christian profession. 



On My Own 271 

Bishop Teutsch especially was a dignitary after my own heart, a 
morally unimpeachable personality, staunch of character and 
possessed of an authority dependent upon no earthly office or 
secular power. I place him on the same level with other Church 
dignitaries of the various Christian denominations whom I have 
met in the course of my life : His Holiness Pope Pius XII, who as 
Cardinal Pacelli, the Papal Nuncio, was a guest in our house; 
Neuhausler, the Suffragan Bishop of Munich, who, while in 
Dachau Concentration Camp under Hitler, was a true minister 
and father in God; and the late Bishop Wurm of Wiirttemberg, 
who stood by me in the internment camp at Ludwigsburg and 
throughout my denazification trial as an indefatigable champion 
of morality, justice and freedom. 

The Bucharest lecture was the prelude to a series of lecture 
tours inspired by my success in the “Carolinum”. I spoke con- 
secutively in Berne, Copenhagen, Stockholm, and on each occasion 
had the satisfaction of meeting and speaking to representatives of 
the respective Governments among a select audience. And every- 
where ffie subject of my discourse was the fight against reparations. 



CHAPTER THIRTY-FIVE 


The End of Reparations 

T he success of my lectures in the neutral countries left me 
no peace. I had to pursue my campaign of enlightenment 
right into the headquarters of our most influential political 
opponent. Ever since the conferences which had been held under 
the names of Dawes and Young it had become increasingly clear 
that the United States of America had become the decisive factor, 
economically and politically, in the destiny of Europe. I was bound 
to try to win the support of the population for my objective. 

My son Jens had expressed the wish to spend a year working in 
America, so I took the opportunity to make the journey with him 
and my wife in the autumn of 1930. My friend Melvin Taylor had 
signified his willingness to take Jens for a year into the First 
National Bank of Chicago. I answered the enquiry of a New York 
lecture agency by booking up for some lectures on economic 
subjects and prepared about a dozen different talks in all. 

Elections for the Reichstag were held on the 14th September 
1930. I went to the poll in the morning and caught the midday 
train for London. On our arrival the following morning we were 
astounded at the result of these elections. The National-Socialist 
Party, which up till then had had twelve representatives in the 
Reichstag, had gained no fewer than a hundred and seven seats. 

This result could be attributed to one thing only: the steadily 
worsening economic and social condition of the German people. 
Hitherto I had taken hardly any notice of the National-Socialist 
movement. Not only was I very little interested in party politics 
as such, but my somewhat retired life at Guhlen and my lecture 
tours meant that I had paid scarcely any heed to Hitler’s growing 
influence. 

Now, however, the result of these elections afforded me a wel- 
come opportunity of pointing to the consequences confronting 
Germany if the misery attendant on the payment of reparations 
were to be perpetuated. My friends in the Qty bombarded me with 
questions and began to give concrete expression on ’Change to 
their mistrust of economic and political conditions in Germany. 
Naturally I had no wish to see German credit imperilled. I deliber- 
ately and pointedly gave instructions for the purchase of German 



The End of Reparations 273 

bonds quoted on the London Stock Exchange. My action at once 
became noised abroad and was not without its reassuring effect. 

We remained in London a few days before boarding our steamer. 
The crossing was uneventful until, shortly before we landed, I w'as 
startled by a radio report from Berlin telling of negotiations between 
the German Government and a New York Banking Syndicate 
under the management of Lee, Higginson & Co. I was horrified. 
Once again the German Government was endeavouring to conceal 
the true economic situation by piling up fresh debts abroad. To a 
radio enquiry which I addressed to the Government I received the 
reply that Otto Kiep, the German Chargd d’Affaires in the United 
States, would give me all the information on arrival. Although now 
a private individual I had acquainted my Government with the 
purpose of my journey before I left, and I felt justified in requesting 
an explanation in order to avoid adverse reactions in America as a 
result of unwarranted statements. 

Not only did the elections of the 14th September yield one 
hundred and seven seats to the right-wing radices ; the Communist 
Party also had shot up from fifty-four to seventy-seven representa- 
tives. Both right- and left-wing radicalism had increased beyond 
all expectation. The moderate Parties, including the Social- 
Democrats, had lost a total of one hundred and eighteen seats. 

All the anxieties that had beset me during my time as President of 
the Reichsbank came crowding back. My struggle against excessive 
foreign indebtedness had proved fruitless. My efforts to put an end 
to the payment of reparations had met with no response. Did the 
German Government mean to continue its passive policy ? Neither 
the lowering of the standard of living of the German population, 
nor the reduction in salaries and incomes, nor, in brief, any de- 
flationary measures were going to solve the German problem. 

On my arrival, Kiep gave me details of the loan negotiations, 
which were already as good as concluded. My friend George 
Mumane, partner in the banking firm of Lee, Higginson & Co., 
enquired what I thought of this transaction, which was to consist 
of a three-year loan repayable in equal instalments of one-third 
over the next three years. I found myself in a regular cleft stick 
when he asked me if I considered that this advance was amply 
secured and whether it was a wise measure. Despite my strong 
opposition I could not go so far as to imperil the definite conclusion 
of negotiations. On the other hand, neither my former attitude nor 
my present sincere conviction would permitmeto express appro\^. 
My answer therefore was something after the following: 

“You’ll certainly get your money back, Mumane, though 
whether it will be precisely on the dates agreed upon may be open 



2^4 My Seventy-Six Years 

to doubt. As to whether the loan can be described as a wise measure, 
I am not in a position to reply to that question, in view of its 
political character.” 

When I called on the lecture agency I was considerably aston- 
ished to find that instead of the eight or ten lectures agreed upon 
there was a perfect mountain of enquiries. A thick bundle of 
letters and telegrams from every part of the United States was 
waiting to be answered. I could not possibly satisfy all the requests 
but I saw a big chance of planning my campaign against reparations 
on a wide basis. I was particularly impressed by the fact that among 
the different subjects I had suggested, some ninety per cent of the 
enquirers had chosen reparations. 

During the ensuing fifty days I gave almost as many lectures, 
from New York, Philadelphia, Boston in the East to Los Angeles 
and San Francisco in the West. I spoke to audiences of students 
and professors, to economic associations of business-men, indus- 
trial leaders and bankers; to numerous clubs and public meetings. 
During those fifty days I slept in forty-two different beds, twenty- 
two of them in Pullman sleepers. On several occasions I gave three 
talks in one day. My wife went everywhere with me and shared all 
my ups and downs. 

All my lectures were given in English, and nearly all were 
followed by open discussion during which intelligent questions 
from the audience proved both stimulating and fruitful. I invari- 
ably preferred this volley of question-and-answer to the actual 
lecture itself, for I am better at debate than at plain speech-making. 
Moreover, debates afforded me greater opportunity of exploring 
the psychology of my listeners. Through public dinners and many 
private meetings I contacted innumerable Americans. Even today 
I run into many whom I met during that period and who come up 
and speak to me, thoughsometimes I fail to recall every one of them. 

The organization of these events was always most impressive. 
Most of the lectures took place immediately after some public 
dinner which at times would include as many as two thousand 
people. True, a certain monotony in the menu was inevitable: 
it was nearly always either a mutton dinner or a chicken dinner — 
though mostly chicken dinner followed by ice cream. Any attempt 
to vary this sequence proved fruitless. 

On my tenth evening, when I was to speak in Philadelphia, I 
said to the chairman as we went in to diimer: 

“Herr Wassermann, if we have chidten and ice cream again 
I shall strike I” 

“Just a minute,” said Wassermann, "I’ll go and see if I can’t 
do something.” 



The End of Reparations 275 

He was back in a few moments with a long face and murmured : 
“Sorry, Dr. Schacht, it’s chicken and ice cream.” 

The theme of these talks on reparations was essentially the same 
on all occasions — ^namely, that the continued payment of repara- 
tions was an economically crazy business, not only for Germany 
but for world trade as a whole. In many debates I was asked about 
the significance of the National-Socialist success in the recent 
elections. Later, at my denazification examination, they tried to 
make out that I had spoken in favour of National-Socialism dming 
my American visit, which of course is nonsense. Rather I pointed 
to the National-Socialist success as an example of the danger that 
would arise if further efforts were made to extort payment of 
reparations from the German people. In the course of my denazi- 
fication I received a letter from a farmer in Lower Saxony who had 
been a working student at Madison University, Wisconsin, and 
had heard me lecture. He wrote recalling my talk at Madison: 

“I still remember your arguments distinctly. The lecture was 
essentially concerned with Germany’s economic situation, above 
all with the burden of reparations. During the debate you were 
asked what you thought of the National-Socialists following their 
big success in the elections a few weeks previously. The gist of your 
reply was that one should not underrate the Nazi movement. It 
had its roots to a great extent in the wrong-headed policy of the 
Allies vis-k-vis Germany, especially in the extortionate demands 
for reparations which would ultimately lead to mass unemploy- 
ment and to the pauperization of the entire German nation. If 
this policy were abandoned the Nazi movement would lose much of 
its attraction.” 

As a result of my lecture tour the local Press throughout the 
country began to interest itself in the reparations question. The 
German Government too might have admitted that my journey 
had been of service to Germany’s cause, particularly as they could 
have insisted that the views I expressed were those of a private 
business-man. Unfortunately I was greatly disappointed in the 
Government’s attitude. I had made it quite dear in my first lecture 
in New York, immediately after my arrival, that if payment of 
reparations continued to be enforced the time would come when 
transmission in foreign currency would no longer be possible. This 
was the plain, obvious statement of a business-man to a business- 
minded audience. The first talk, in fact, was given before an invited 
audience of some six hundred representatives of New York’s 
business community at the instigation of the German-Ameiican 
Chamber of Commerce:. I was somewhat discomfited for a moment 
or so when, on mounting the platform, I fbimd myself facing a 



2-76 My First Seventy-Six Years 

microphone and the chairman’s voice announced: “Please, 
gentlemen, be silent now, we are on the air.” My lecture had been 
sponsored by one of the radio clubs. As I was spealdng in English 
for the first time after a fairly long interval, and speaking extempore, 
I had to overcome a certain nervousness but managed to do so 
without any untoward incident. 

The incident occurred afterwards, when my remarks as to a 
possible stoppage of payment were published in the Press in 
correspondingly sensational fashion. On the selfsame day, instead 
of contenting himself with describing my statements as those of a 
private individual, Dietrich, the German Minister of Finance, 
declared at a Press reception in Berlin that Herr Schacht was not 
authorized to make such statements which in no way represented 
the view of the German Government. I had never said they did, 
and Dietrich’s pronouncement was to a certain extent merely 
beating the air. But this personal disowning of me created the 
impression that it would still be possible to continue the payment 
of reparations — ^therein lay the mischief. Somewhat irritated, I 
informed Kiep, our Charge d’Affaires, of my surprise at this revel- 
ation and its implicit mistrust, and requested him to transmit this 
to Berlin. As early as the following morning Kiep phoned me the 
Government’s reply to the effect that they had complete confidence 
in me. Such clumsy double-dealing (to say the least of it) fairly 
made me furious and I telephoned Kiep, “Please cable back: 
Be damned to you!’’ 

Towards the end of my tour I received an offer from an American 
firm to publish the subject-matter of my lectures in book form. 
Nothing could have pleased me more than this opportunity of 
consolidating the effect of my ta lk s. A discussion arose with the 
publisher over the title. My suggestion that we should use Carlyle’s 
Down the Niagara and After was rejected. Finally we agreed on the 
attractive title: The End of Reparations. Neither of us was afraid of 
anticipating an event which we confidently expected to materialize. 

The book appeared first in New York, then, in March 1931, 
in Germany, and was a big success. A London edition followed 
shortly afterwards and caused me no little amusement, as the 
publisher declared that he was unable to accept the American 
translation and must publish the book in English 1 1 was reminded 
of the jesting words of an Englishman to his American friend: 
“Nothing separates our two nations except the language.” 

Fortunately I was not obliged to confine my campaign to public 
meetings. I had been able to have private speech with a whole lot 
of politicians. One of the most impressive occasions was my 
talk with President Hoover, Our acquaintance dated from the 



The End of Reparations 277 

period of myactivities in Belgium during theFirst World Warwhen 
Hoover rendered yeoman service in the feeding of the Belgian 
population. He was by far the most distinguished American of our 
time and it was his misfortune that the world economic crisis 
which followed the artificial post-war boom should have occurred 
during his period of office. The fact that he was not re-elected 
President in 1932 can only be attributed to this event. Economic 
depressions are apt to be attended by political changes. 

Our tite-d-tite at the White House lasted nearly an hour, 
during which I was able to acquaint Hoover with the devastating 
effects of the war tributes, of which he showed himself fully appre- 
ciative. Between recognition and effective action, however, a 
certain interval was necessary. But when in June 1931, six months 
after my tour, Hoover suggested to the Allied Powers a moratorium 
for the Young payments, the end of reparations was assured. 

On my return home I spoke in Bremen and Munich, always on 
the same subject, nor did I omit to report personally to Briining, 
the Chancellor. The evening before the publication of my book 
and my departure for a lecture in Stockholm, I had another exhaus- 
tive discussion on the situation with Briining and Piinder, his 
Secretary of State. I promised to send him the first copy of my 
book when it was published on the morrow. 

Although I was on the best of terms with Bruning and although 
I had, and still have, the highest respect for his sterling character, 
his uprightness and frankness, nevertheless my visit to Stockholm 
brought me again into outward conflict with the Government. 
To the question put by a Swedish journalist, “What would you do, 
Herr Schacht, if you were to become Chancellor tomorrow?” 
I had replied, “I would make an end of payment of reparations 
that very day.” The Government shied away from this statement 
so promptly that once again they gave the impression that they 
still considered these rejinittances possible. Three and a half months 
later the payment of reparations ceased altogether. 



CHAPTER THIRTY-SIX 


Meeting with Hitler 

D uring my absence, the political influence of the greatly 
I increased radical parties — ^both left- and right-wing — ^had 
made itself effectively felt. It had become obvious that 
economic developments could not proceed along the same lines as 
heretofore. On Briining fell the heavy burden of somehow main- 
taining the standard of living of the German population in the face 
of constant pressure from abroad and the results of the world 
economic crisis. This task could have been carried out only if the 
Central Parties, including the German National and the Social- 
Democrats, had backed up Briining. Unfortunately they did 
not. As the strongest Party, the Social-Democrats reused to co- 
operate with the other Central groups, so that the Chancellor was 
continually faced with the danger of a vote of no-confidence in the 
Reichstag. As a result, Briining was forced more and more to take 
the path of so-called Presidential Government, which was con- 
strained to rely, not on majority resolutions in the Reichstag, but 
on constitutional pre-arranged emergency orders issued by the 
President. The masses, already crying out against the prevailing 
misery, sided on the one hand with the Nationd-Socialists and their 
radical promises, and on the other hand with the Communists. It 
seemed as though before long political developments in Germany 
would admit of no way out save the transition of the Government 
either to the right or the left wing of the Reichstag. 

In December 1930 von Stauss, a friend of many years’ standing 
who had been on the board of the Deutsche Bank since 191 5, asked 
me to a dinner one evening to which he had also invited Hermann 
Goering. I was naturally very pleased to have the opportunity of 
meeting one of the foremost leaders of the National-Socialist 
movement. This dinner party of three discussed the universally 
burning topics of the economic situation, the rise in unemployment 
figures, the timidity of German foreign policy and all the other 
relevant questions. Goering turned out to be a pleasant, urbane 
companion, though he did not give me the impression of being 
especially conversant with any one subject. I could not possibly 
have deduced from the conversation anything that might have been 
described as an irreconcilable or intolerable political radicalism. 



Meeting with Hitler 279 

Consequently when, not long afterwards, I received an invitation 
to dinner from Hermann Goering and his wife I had no scruples 
about accepting, particularly as the invitation was accompanied 
by a note to the effect that Adolf Hitler would be there. 

Goering’s dinner-party took place on the 5th January 1931. 
Besides my wife and myself there were present Fritz Thyssen, 
Frau Karin Goering’s son by her first marriage, and Dr. Goebbels, 
At that time the Goerings lived in a flat in the Badensche Strasse 
in Berlin-Wilmersdorf, a pleasant middle-class home, furnished 
with comfort and good taste without any sign of ostentation. 

Frau Goering, a tall, slender Swede with a most winning and 
kindly nature, suffered from a serious heart complaint. After 
dinner, an essentially simple meal, she had to lie on the sofa where 
she listened to our conversation without taking any part in it. 

Hitler came in after dinner. He wore dark trousers and the 
traditional yellowish-brown jacket — ^the uniform of the Party. His 
appearance was neither pretentious nor affected — on the contrary 
he was natural and unassuming; there was nothing about him 
to indicate that he was already the leader of the second largest 
German Party in the Reichstag. After the many rumours that we 
had heard about Hitler and the published criticisms we had read of 
him we were pleasantly impressed by the general atmosphere. 

Our talk quickly turned to political and economic problems. 
At this first meeting I learned what all of us experienced later, that 
in a discussion with Hitler his associates contributed only five 
per cent; Hitler himself supplied the remaining ninety-five per 
cent of the conversation. His skill in exposition was most striking. 
Everything he said he demonstrated as incontrovertible truth; 
nevertheless his ideas were nottmreasonable and were entirely free 
from any propagandist pathos. He spoke with moderation and was 
obviously aiudous to avoid anything that might shock us in our 
capacity as representatives of a more traditional society. 

Goebbels and Goeringmaintained an impressive silence through- 
out and did nothing to underline Hitler’s arguments. Since I had 
not come in order to sell Hitler my political and economic opinions 
I contented myself with taking note of his views and intentions. 
The thing that impressed me most about this man was his absolute 
conviction of the rightness of his outlook and his determination to 
translate this outlook into practical action. 

Even at this first meeting it was obvious to me that Hitler’s 
power of propaganda would have a tremendous pull with the Ger- 
man population if we did not succeed in overcoming the economic 
crisis and weaning the masses from radicalism. Hitler was obsessed 
by his own words, a thorough fanatic with the most powerful 



28o My First Seventy-Six Years 

effect on his audience ; a bom agitator in spite of a hoarse, some- 
times broken and not infrequently croaking voice. 

Following the experience of this evening I took the opportunity 
during the ensuing weeks of urging the Chancellor and other 
politicians with whom I was in touch to incorporate the National- 
Socialists in a Coalition Government as soon as possible. Only 
thus, it seemed to me, could the complete transfer of power into 
the hands of this radical right-wing movement be avoided. In a 
coalition, so far as one could foresee, National-Socialism might 
have been kept within reasonable bounds by having to share the 
responsibilities of government. When, a year later, the idea finally 
caught on the opportunity was already past. 

The remainder of 1931 brought a severe deterioration of the 
economic and financial situation which Briining was unable to 
counteract without the backing of the whole of the Reichstag 
moderates. Whether Briining’s resignation was due to this impossi- 
bility, to the standing aside of the Social-Democrats or to intrigues 
on the part of the German National Party remains open to question. 
Probably it was a combination of all three. 

The fateful decision of von Papen, Briining’s successor, to 
dissolve the Reichstag and proclaim new elections was the final 
factor that brought about Hitler’s seizure of power. On the 31st 
July 193a, 37-2 per cent of the German people voted National- 
Socialist and 14 '3 per cent Communist. The position of the two 
fronts was now clear. The centre of the Reichstag, from the Ger- 
man National Party down to the Social-Democrats, had shown 
themselves incapable of shaping the nation’s destiny. Words like 
military dictatorship and civil war began to creep into public 
discussions, 

Throughout the years following the collapse, in the spring of 
1945, at home and abroad, which put an end to the National- 
Socialist regime, the problem has been discussed over and over 
again and from every possible angle — ^who was to blame for the 
establishment of the Hitler regime. Party-political blindness has 
repeatedly led to the defamation of individuals accused of having 
prepared the way and served as a mounting-block for Hitler. 
Against this must be reali2ed once and for all lhat not a single one 
of the persons thus accused sided with the National-Socialist 
movement prior to the 3 ist July 1932. I myself had never, before 
that date, supported Hitler either in writing or by word of mouth. 

After the collapse it was even accounted a crime — or at least as 
opprobrious conduct— to have had any personal contact with such a 
“criminal” as Hitler. This political attitude is distinguished by the 
same kind of idiocy which nowadays refuses to entertain discus- 




IVith Hitler in 1934 , hying of the })niihim sbnu of the min Reiehsbtitih hiiMtig 

^4^ ^WuvvC^-crut O'^ cU-^Ci/vvCX 

PrOVv^. 4^^ X-i^uJl->yJUM>nX cU4X,C|rvv. 





Meeting zoith Hitler 281 

sion. with political representatives of the Russian-occupied Eastern 
Zone over the possibilities of reunion with the Western Zone. 

This kind of entirely unproductive political outlook is also 
practically unsound because all those circles who today are loud 
in their denunciation of any dealings with the “criminal” 
actually sought and achieved contact with that same “criminal” 
in 1932. By way of illustration I quote a man upon whose moral 
character no one can cast the slightest aspersion. 

My friend Paul Rohrbach, mentioned in an earlier chapter, held 
the view that one should have no “truck” whatever with a black- 
guard like Hitler and expressed this view in a letter to Briining. 
Briining’s reply, dated 31st August 1932, runs as follows : 

“For weeks past I have been urged by persons who do not belong 
to my Party not to refuse a discussion with the National-Socialist 
leaders. As long as negotiations were pending between the National- 
Socialists and the Government I could not bring myself to engage 
in such discussions for fear of upsetting these negotiations. Since, 
however, the Government subsequently failed to come to an 
agreement with the N,S.D.A.P.* (a situation clearly foreseen by 
knowledgeable politicians at the time of the dissolution of the 
Reichstag) and following renewed petitions by patriotically 
minded people, I have signified my readiness to seek contact with 
them. 

“Such a discussion would serve to determine whether it were 
anyhow possible to form a constitutional Government, and I 
considered it my bounden duty to attempt it. I feel it is incumbent 
upon me now as heretofore, vis-i-vis all those who elected the 
President of the Reich, to spare no effort to consolidate the Presi- 
dent's authority and prevent any straying along an unconstitutional 
path. You will see from this that my action is determined, not by 
any bitterness but by anxiety for my country, 

“I am in entire agreement with you in your condemnation of 
' the events at Beuthen and also of Herr Hitler’s statements in this 
connection. If, nevertheless, you still raise objections to my having 
had discussions vrith leaders of the National-Socialist Party you 
will have meanwhile gathered from the newspapers that even the 
Government does not refuse to have dealings with Herr Hitler 
after his above-mentioned statements. As a matter of fact, my 
activities in this matter are confined to this discussion. The actuu 
negotiations are in the hands of persons coimected with the Central 
Party who have been expressly nominated by the Party committees 
to conduct such negotiations.” 

The political necessity for coming to an agreement on the 
question of government , with the National-Soci^t Party and its 

• NationaUoxialisHsche Deutsche Allgemeitte Partei — ^Nazi Party. 


10 



aSa My First Seventy-Six Years 

Leader was admitted by all Central Parties after the results of the 
elections of the 31st July 1933 had demonstrated that the National- 
Socialists were by far the strongest Party in the Reichstag. And 
despite a reduction in National-Socialist votes in the second 
Reichstag election in November 1933, the fact remained that a 
majority in the Reichstag was no longer possible without the ex- 
treme Left or the extreme Right. The prospect of an alliance with 
the Communist Left aroused greater misgivings than with the 
National-Socialist Right. 

Prior to July 1932, one or two National-Socialists had occasion- 
ally approached me and sought my advice on the grounds of my 
meeting with Hitler. Among them was Herr Keppler, Hitler’s 
economic adviser, a mechanical engineer by profession and until 
now partner in a small glue factory near Heidelberg. 

On another occasion, Goering arranged that I should meet 
Rower, later a gauleiter, who in 1933 had become the first National- 
Socialist Prime Minister in the Province of Oldenburg. R6wer had 
hit upon the remarkable idea of introducing a special monetary 
system in Oldenburg and operating all payments only by a transfer 
from one giro account to another. I did not find it very easy to 
remain polite or serious in face of such nonsense. When I asked 
how Herr R6wer proposed to tackle, e.g. payment of ladies’ hosiery 
from Chemnitz — ^which even the Oldenburg country girls would 
not willingly forgo — ^he replied: “Well, we shall just have to get 
hold of some Chemnitz currency.”* 

I very quickly broke off my conversation with Herr R6wer and 
his fellow specialists and wired Hitler the result of our talk, adding 
thereto the following verse by Gleim; 

Don’t wait for miracles, 

Already Time takes Eight, 

Leaving no evidence 
That he had aught to show. 

Don’t wait for miracles, 

They are npt yours by right. 

Virtue and di%ence 
Are all the goch bestow. 

Whether Hitler took these lines to heart I don’t know. In any 
case, it must have helped him to appreciate my view of the situation. 

* For the benefit of readers not intimately acquainted with banking 
terms, tiM word “ Devisen ” used in the original means “ foreign exchange ” 
or “foreign currem^”. RSwer, whose ideas on finance were peculiar — to 
put it n^dly — ^was in tWs instance proposing to treat a town in Saxony as 
though it were in a foreign country with a currency of its own. Needless to 
say nothing came of it. 



Meeting with Hitler 283 

Taken all round, Karl RSwer wasn’t a bad sort. He had run a 
small business in the Cameroons and had seen something of the 
world which, during the years that followed, tended to make him 
very sceptical of his Party’s transgressions. One day when he was 
taking a walk in the municipal gardens in Bremen with the well- 
known industrialist, Franz Stapelfield, he suddenly asked : 

“How many trees would you reckon there were in this park 
Franz?’’ 

“That’s a funny question,” replied Stapelfield in his rich 
dialect, looking round. “At a guess I’d say about four hundred, 
Karl.” 

“Not enough, Franz, to hang all of us.” 

RQwer just escaped being hanged — ^he died a natural death. 

After several meetings wiA persons purporting to represent the 
German economic outlook, including more than one conversation 
with Gottfried Feder, I asked myself what would become of 
German economy if such theories should even be put into practice. 

The economic situation had rapidly deteriorated. The number 
of unemployed rose steadily into millions. During my walks in 
the woods at Guhlen I muUed over our economic and political 
problems. 

During one such walk I came upon some thirty herons standing 
in a large clearing, obviously, as could be gathered from the move- 
ment of their heads, engaged in lively discussion on an important 
matter. Suddenly, from the middle of the group, four or five 
detached themselves, flew about a hundred paces away and went 
into a huddle. They must have come to a decision pretty quickly, 
for within a few minutes they flew back to the main body, made 
their views known and the whole crowd spread their wings and 
rose into the air. There will always, I thought to myself, be a few 
leading brains who will not only have to think but also decide and 
act for the great mass of people. 

I began to wonder whether I was justified in continuing to keep 
away from public affairs to such an extent as I had done till now. 



CHAPTER THIRTY-SEVEN 

The Bank Crisis 

I N March 1931 an event occurred which I could only regard as a 
storm signi. The largest bank in Austria, the Austrian Kredit- 
anstali, was no longer in a position to meet its foreign liabilities. 
It ceased its payments abroad and came under the trusteeship of its 
foreign creditors. It was a decisive shock to the system of the 
granting of international credits, and it was clear that Germany 
could not fail to be affected by it. Foreign creditors began to call 
in the loans that had previously been made to Germany. 

Matters now developed as I had always foreseen and foretold. 
Private firnos could not furnish the necessary foreign currency 
from their own resources and were obliged to purchase from 
the Reichsbank. The Reichsbank’s reserves of foreign exchange 
and gold melted away at a terrifying rate. Since the amount of 
reserves was invariably published by the Reichsbank in its weekly 
returns, every foreign creditor was able to follow the decline in 
gold and foreign exchange, which resulted in a steady increase in 
the calling-in of loans. 

On the 3rd June 1931, in the middle of a very heated economic 
and political atmosphere, I had accepted an invitation to the White 
Hart near Dresden, which included all the so-called ‘‘German 
Associations” (clubs, societies, unions). It was, if I remember 
rightly, the last demonstration at which the representatives of 
laissez-faire monetary policy sought to defend their ideas, first 
and foremost among them being Professor Wilhelm Ropke, a relic 
of the plebeian type of Schultz-Delitz economic liberalism dating 
from the middle of the last century. 

1 took the opportunity to address the meeting and pointed out 
that the very essence of banking advances demanded particular 
consideration on the part of creditors when faced with difficult 
times. The creditor should not aggravate the debtor’s condition 
by compulsory calling-in of loans, thereby actually creating an 
insolvency which would have been avoided by the exercise of a 
little patience. 

I had hoped that the Reichsbank would have taken advantage 
of these expoundings to proclaim a moratorium and thus stem the 
unlimited withdrawal of foreign exchange reserves. Curiously 



The Bank Crisis 285 

enough, the Reichsbank did not show suflScient understanding of 
the situation. A Central Bank can at any time cope with a rush on 
the part of its creditors by issuing more notes, thereby tiding 
the banks over the difficulty and enabling them to meet all pay- 
ments. In the case of a run on payments in foreign currency the 
Central Bank is entirely dependent on its reserves of foreign 
exchange. The Reichsbank took the view that all foreign demands 
must be met as promptly as possible and the rush would then 
cease. The exact opposite happened. The more other countries 
realized the dwindling of the Reichsbank’s foreign reserves, the 
more they hastened to get their money back before those reserves 
were entirely exhausted — and the devil take the hindmost ! 

The complete collapse of the Reichsbank foreign exchange 
reserves coincided with the failure of one of the big banks. The 
Danatbank was, of all the banks, the most heavily involved from 
the point of view of foreign currency; it was already severely hit 
by the expenditure on the purchase of this currency when the 
collapse of the Nordwolle-Gesellschaft (Northern Wool Company) 
in Bremen, to whom it had made large loans, placed an addi- 
tional strain on its resources. The Danatbank was faced with the 
necessity of suspending payment. 

I was sitting with my family on the evening of the iith July 
when the telephone rang. An urgent message from Chancellor 
Briining begged me to come at once to Berlin. I thought it over for 
a minute or two. It was then nearly ten o’clock — ^the drive to Berlin 
would take more than an hour. I replied that it was too late to do 
anything that evening. The following morning, 12th July, I was 
asked to report at the Chancellor’s office that same evening. 

When I arrived I found two stormy meetings in progress. In 
one room was a gathering of bank managers who were indulging in 
mutual recriminations over their financial situation and professional 
conduct. In another room, in an even greater babel, ministers, 
heads of departments. Government and Reichsbank officials were 
debating on the appropriate measures to be taken. I was invited to 
take a seat on Briining’s right (Bruning was in the chair) and for the 
first time I learnt of a number of details revealing a state of affairs 
which, in my isolated existence at Giihlen, I had not imagined could 
be so dire. All the banks had been compelled to ms&e colossal 
payments and were now jointly and seve^Iy faced with the im- 
possibility of meeting their foreign obligations. The Reichsbank’s 
foreign exchange was well-nigh exhausted. Other banks besides 
the Danatbank had sustained heavy losses. 

Ever3rthing had turned out as I had foretold. True, only a section 
of the least guilty, namely the banks, were seated around the 



286 My First Seventy-Six Years 

tables. The national, provincial and municipal politicians, and the 
big industrialists who had drawn heavily on the foreign advances, 
were absent. 

The need for Germany to declare an immediate moratorium 
on foreign payments was now obvious, a fact which compelled 
attention not by reason of guess-work but by sheer development 
of circumstances. In addition, the question of the Danatbank’s 
suspension of payment remained to be cleared up. 

I have always held the view that in the matter of granting loans 
it is not only the debtor who should be held responsible, but the 
creditor should be deemed to share the responsibility for the 
security and liquidity of the loans. He must not allow Goethe’s 
lines to apply to himself : 

“You let the poor man pile up debts, 

Then leave him to his misery.” 

When, in 1939, the General Insurance Company of Frankfurt 
(FAVAG) got into difficulties, old Baron Schroeder, head of 
the well-known Anglo-German banking firm, approached me in 
London. 

“Herr Schacht, in your capacity as President of the Reichsbank, 
you must see to it, whatever happens, that I don’t lose any money 
with FAVAG, that I get my loans back,” 

I pretended to be very surprised and replied coolly; 

“I have always thought, Baron, that assurance companies were 
not borromers, but on the contrary acted as lenders. I don’t under- 
stand on what groimds you made loans to FAVAG, particularly 
loans in foreign currency. Furthermore, I would ask you what 
interest and coimnission you have earned on these loans?” 

“Including commission I reckon we shall have made between 
eight and nine per cent.” 

“And what percentage would you have obtained if you had 
loaned the money in England?” 

“About four per cent.” 

"Then please, Baron, deduct the overpayment of five per cent, 
from the amount of the loan, and I hope you will manage to be 
satisfied with a correspondingly lower repayment of your advance .” 

In the present case of the Danatbank also I could not refrain 
from censuring the foreign banks for their unsound policy in 
making so many short-term advances to Germany. They must 
have been as fully aware of the impossibility of repaying such large 
amounts on the due dates as I had previously been, and as I had 
repeatedly warned the public. 

1 pleaded therefore that the Danatbank’s small creditors should 



The Bank Crists 287 

be given a guarantee up to ten thousand marks for each individul 
account; but the larger creditors should be obliged to await the 
gradual liquidation of the Danatbank estate. The small creditor, 
who was not in a position to keep tabs on the economic and 
financial position but relied on the reputation of the big banks, was 
to be protected; the large creditor, who should have closely fol- 
lowed the trend of events, would have to suffer the consequences 
of his actions. 

My suggestion met with the most violent opposition from Herr 
Schaffer, Secretary of State in the Ministry of Finance (not to be 
confused with his namesake who later became Federal Minister 
of Finance). Herr Schaffer declared that intolerable damage would 
be inflicted on the prestige of the Reich if all foreign creditors were 
not satisfied. Shortly afterwards, thanks to the support of his foreign 
banking friends, Herr Schaffer was appointed liquidator of the 
Swedish match firm of Kreuger and Toll, in which capacity he still 
resides in Stockholm. 

The matter was settled according to Schaffer’s ideas.On the other 
hand, it was decided that the Danatbank should no longer continue 
to function but should be liquidated. I left the meeting. 

Once again a number thirteen followed this eventM evening, 
and once again it proved a decisive day for me. On the 13th July 
the Giihlen telephone rang. For the second time Chancellor 
Briining asked me to come to the capital. Once there he begged 
me to accept the post of Reichs-Commissioner, and in that capacity 
to bring order out of the chaos of the bank crisis. I thanked him 
sincerely for this expression of trust. 

“I have already held the position of Reichs-Commissioner on 
a former occasion, Chancellor, although at that time also there 
was already a high-ranking official — ^namely the President of the 
Reichsbank — ^who would have been fully qualified to solve the 
currency problem with which I was confronted. At that time, too, 
I understood that, following the difference of opinion between the 
Government and the President of the Reichsbank, the Govern- 
ment should have resorted to the appointment of a special com- 
missioner. Today, on the other hand, you have a President of the 
Reichsbank who enjoys the confidence of the Govenunent and 
co-operates harmoniously with the Government. Today, therefore, 
the President of the Reichsbank is the right man to see the banks 
1 through the crisis. What plenary powers would you give to a 
commissioner in addition to those of the President of the Reichs- 
bank or, in certain circumstances, against him ? The task which you 
set me comes by right within the province of the President of the 
Reichsbank.” 



288 My First Seventy-Six Years 

Briining seemed to hint that during the course of the bank crisis 
the Reichsbank had not hitherto shown much initiative or afforded 
him much support. The solution of the Danatbank crisis was now 
in the hands of the Government. 

“That is a fact, Chancellor, about which I regret to say I 
can do nothing. The Government’s duty was simply to declare a 
moratorium on foreign payments. In my opinion the solution of 
the internal financial crisis was the Reichsbank’s job.” 

“What, in your view, ought the Reichsbank to have done?” 

I thought for a moment on what I would have done in my 
capacity as President of the Reichsbank. At the first intimation 
of the Danatbank’s difficulties the Reichsbank should have called 
a meeting of the other banks and pledged them to the support of 
the Danatbank in order to prevent the latter having to stop 
pa3nnent. The Reichsbank should have furnished the necessary 
means, thus ensuring that the question of whether the Danat- 
bank should be liquidated or carry on would have been decided 
in the course of developments. That was what I thought, but I did 
not wish to voice any criticism of the Reichsbank. 

Briining appeared unsatisfied and again urged me to accept his 
offer. I maintained that we could not come to any decision over 
the head of the President of the Reichsbank, Nor would I budge 
an inch, even when President Hindenburg sent Herr Meissner, 
his Secretary of State, who conveyed the President’s own wish 
that I would accept the position. I have always had a great respect 
for the old gentleman in his capacity as a soldier, but not for his 
political qualifications and decisions. Had he not, in the presence 
of his entourage, described as "desertion” the logical conclusions 
I had drawn from the adulteration of the Young Plan? His present 
request, therefore, and its imputation surprised me somewhat. 
But setting aside any possible feeling of irritation, I saw no reason 
to alter my resolve. 

I went back to ray retreat at Gfihlen and took no further part in 
the shaping of banking circumstances. The Danatbank was taken 
over by the Dresdner Bank to which the Government was obliged 
to furnish substantial assistance. The failure of the Danatbank 
and the clearing up of the crisis involved the country in a total 
loss of four hundred million marks. 

I was not even informed of the extent of the Reichsbank’s share 
in putting the national finances back on a sound basis. Shortly 
before the crash, the President of the Reichsbank, Herr Luther, 
had flown to London, Paris and Basle in a last-minute attempt to 
obtain credit assistance, which could not be granted (as might 
have been foreseen) in view of the unavoidable moratorium on 



The Bank Crisis 


289 

foreign payments. Only after the moratorium had been declared 
did the Allied Central Banks place a gold deposit of four hundred 
million marks at Luther’s disposal. This was done through the 
medium of the Basle Bank for International Balance of Foreign 
Payments and carried an interest of four per cent. 

World economy suffered yet another blow through the devalua- 
tion of the pound sterling, which the British Government brought 
into operation on the aoth September 1931. This was the beginning 
of the era of currency devaluations which affected and dieted 
many countries, including the United States, and which was 
repeated at a later date by Great Britain. It was the death-blow to 
trust and good faith in international monetary and credit dealings. 

On the following day Vogler — ^my colleague on the Young 
Plan — called me unexpectedly and asked for information as to 
what steps Germany should now take. Should she retain her gold 
parity as hitherto (even though it existed only in theory so far as 
other countries were concerned) or should she follow the example 
of Great Britain and have recoiurse to devaluation ? I tried to avoid 
answering his enquiry and once again referred him to the President 
of the Reichsbank as the man qualified to deal with it. When 
Vdgler persisted, however, I finally told him over the phone : 

“If I were President of the Reichsbank, Herr VSgler, I would 
board a plane for London right away. Before the crash such action 
was both useless and reprehensible. Now, however, there is the 
chance that we might reap considerable economic advantages from 
Britain if we agree to dev^ue. At the moment the British Govern- 
ment feels extraordinarily uncertain as to the result of the devalua- 
tion of the pound. They would certainly be prepared to grant us 
economic advantages if we were to justify and even buttress her 
action by devaluation on our part. But without attempting such a 
bargain, that is, without obtaining some equivalent, there would 
be no sense in Germany devaluing the mark.” 

Eight years previously I had endeavoured to bring about a closer 
connection between the two greatest European economic powers 
by means of the issue of pormd notes through the Golddiskontbank, 
and my effort then had not been entirely unappreciated. Now, a 
second impulse might perhaps have carri^ the idea a stage further. 


lO* 



CHAPTER THIRTY-EIGHT 


The Harzhurg Front 

M y wife suffered occasionally from heart trouble which 
was why we spent the late summer of 1931 at Kudowa 
in Silesia, a hydro specializing in heart complaints. 
There one day I received a telegram from Schmidt-Hannover, 
C hairma n of the German National Party, inviting me to attend a 
session of all nationally-minded Parties and associations at Bad 
Harzhurg with the object of taking a definite attitude vis-i-vis the 
Government’s policy. He asked me to report on the economic 
situation and I saw no reason to refuse the invitation. 

I had learnt from the newspapers that Hugenberg and Hitler 
had agreed to hold a joint demonstration, and that one or two other 
groups from the German People’s Party, the Business Party, the 
Steel-Helmets and some agricultural organizations also wished 
to take part. 

I arrived in Harzhurg on the morning of nth October and 
ascertained that representatives of all the above-mentioned groups 
were actually present, united in opposition to the existing Govern- 
ment but otherwise quite distinctly separate from each other. It 
was already apparent that Hitler did not appreciate the fact that the 
initiative had originated with Hugenberg, the leader of the German 
National Party. Hitler would spare no pains to avoid giving the 
impression that his adherents were marching under the German 
National banner. So it came about that during the march past 
of the non-National-Socialist groups. Hitler was ostentatiously 
absent, which in turn meant that there was no competition when 
the National-Socialist march took place. There was much talk, 
later, of the “Harzburg Front”, but in reality this Front never 
existed. It was a “get-together” in appearance only. If this apparent 
“get-together” is to be labelled the “Harzburg Front” it must 
be understood that it was born on the morning of the nth October 
and died that same evening. 

The speech-making session was opened by Hugenberg. Then 
followed Hitler’s address and one by Fieldj’Marshal von der 
Goltz, the liberator of Finland during the First World War. My 
own remarks were brief, but to the point. 

* ‘ The fact, ’ ’ I began, ‘ ‘ that a business-man with no party affiliation 



291 


The Harzhurg Front 

is able to speak to you today is a further sign that the purport of 
this assenably extends far beyond the framework of any Party- 
inspired affair. The interests of German economy are indeed most 
vitally bound up with the ultimate success of the National move- 
ment. Production has shrunk by at least a third ; huge unemploy- 
ment figures look like being permanent; a daily increasing toll of 
bankruptcies is simply an expression of our liabilities at home, 
just as the impossibility of repaying our foreign loans as they fall 
due is an expression of our liabilities abroad; our currency no 
longer serves to promote regular trade, but merely to conceal the 
illiquidity of our financial institutions and our public authorities. 
Such is the state of affairs in Germany today. Further, we have a 
public financial system of which even the Minister of Finance 
himself cannot say on what it is to continue to subsist during the 
coming months, or even weeks. Truly the new Government will 
inherit a heavy burden. 

"Yet even more serious than these staggering facts are the wrong 
foundations underlying the hitherto prevailing system, its insin- 
cerity, its dubious legality, its lack of freedom of action. Our 
financial situation in particular has always been — and still is — 
far worse than has been suggested to the public. Our foreign 
liabilities, for instance, are considerably greater than represented 
in the Basle Report. But no one ventures to state such facts openly. 
No one says that the Reichsbank portfolio now consists of a mere 
fraction of Reichsbank bills — ^for fear that the public might grow 
nervous — and in reckoning the gold coverage some hundred million 
foreign exchange bills are included which will shortly fall due for 
repayment. 

"A second fundamental fault in the system is its dubious 
legality. Who can do business today when his property stands to 
be taken from him under emergency regulations to meet liabilities 
which he could not possibly have foreseen? We have no longer any 
permanent legal principles for productive work in Germany. 

"Yet a third feature is deserving of censure, namely, lack of 
courage when it comes to taking action. The others are no whit 
cleverer or wiser than we are, and the whole business world would 
breathe a sigh of relief if Germany were to take the initiative in 
bringing about a recovery. They demand that we should put for- 
ward a programme. But even the finest programme which the pres- 
ent authorities could seize upon could only work out detrimentally 
in their hands. Germany’s recovery is not a question of individual 
items in a programme; it is not a question of intdligence; it is a 
question of character. 'The restoration of a permanent and ^sured 
justice, of uprightness and honesty in all matters of public life, 



292 My First Seventy-Six Years 

and the determination to act on one’s own initiative — ^those are the 
things that matter. No magic, no printing of paper money, no 
foreign loans can help us. 

“The pi'ogramme which a National Government will have to 
carry out rests solely on a few fundamental ideas. It is the same 
programme that Frederick the Great carried through after the 
Seven Years War: namely, to depend solely on our own resources, 
to extract from our native soil whatever can be extracted, and, 
finally, to live frugally, to save, and to work hard for an entire 
generation. I have had personal experience of what it means to 
fight the foreigner at the conference table, while one’s own Govern- 
ment at home fails to back one up. That is why I hope that the 
national hurricane which is now sweeping over Germany may not 
subside until the roads are once more open to self-determination 
and ultimate success.” 

My remarks certainly contained very sharp criticism of the 
Government’s internal economic policy, but a situation such as 
prevailed at the time invariably demands pungent criticism if a 
change is to be brought about. Nor was I alone in my censure. At 
a much earlier date the magaaine Der deutsche Volkswirt (The 
German Economist), edited by Gustav Stolper, had expressed itself 
in scarcely less forcible terms, and Stolper’s political platform was 
undoubtedly that of the German Democratic Party. On the 4th July 
1930 he wrote in the Volkszoirt: 

“Of the approximately three imllion seeking work this summer, 
who are such a cause of distress in Germany, a million may be 
reckoned victims of the international crisis. The remainder are 
victims of the evils of German financial and economic policy, of the 
lack of insight and of the will to reform and help, where reform 
and help are possible.” 

I had intended immediately on leaving Harzburg to go \vith 
my wife to Meran for a further cure. When I emerged from 
my sleeper at Munich the next morning I was confronted with 
headlines in the early papers : “Schacht’s Flight Abroad: Fear of 
Government Measures following his Harzburg Speech.” 

I came to a quick decision. I told my wife, who had come to 
meet me at the station, that we should have to postpone our 
journey for a day. Then I bought a ticket for the F.D. return 
train to Berlin which stopped only at Niirnberg and Halle, and 
would bring me back to the capital in six hours. In Niirnberg 
journalists came to my compartment with a published article by 
Herr Dietrich, the Finance Minister, expressing in the sharpest 
possible terms his disapproval of my Harzburg contentions. 
Two hours later I had my answer ready and handed it for publica- 



The Harsbiirg Front 293 

tion to the journalists who were waiting for me at Halle, When I 
arrived in Berlin, yet another two hours afterwards, my explanation 
had already found its way into the evening papers. The Press had 
done its work quickly and well. 

The assertions condemning my Harzburg speech which the 
Minister of Finance had thought he was in a position to make, 
were refuted by the Reichsbank in a statement dated the 12th 
October as follows : 

“As regards German liabilities abroad, the revision of the still 
incomplete statistics did actually yield somewhat higher figures 
without affecting the conclusions to be drawn therefrom. In the 
same way the fact has never been concealed from the public that 
a proportion of the bills comprising the Reichsbank portfolio 
consists of accommodation bills and not commercial bills.” 

In after years the reproach has been repeatedly levelled at me 
that my appearance at Harzburg was a proof of my sympathy with 
the Nationd- Socialist movement. Nothing is further from the truth. 
The session was not a National-Socialist affair, nor was it instigated 
by the National-Socialist Party. It was a combined demonstration 
which had been inspired by Hugenberg — much to Hitler’s disgust, 

I quite appreciated the fact the Herr Dietrich, the Minister of 
Finance, should have felt himself particularly hit by my Harzburg 
speech. But I had the satisfaction of knowing that my statements 
were substantiated by the Reichsbank’s official declaration. Per- 
sonally I was sorry for Dietrich, whom I regarded as a thoroughly 
decent, experienced man. Strangely enough, we came face to face 
again at my denazification trial at Ludwigsburg in 1947, and I had 
the pleasure of hearing from Dietrich’s own lips that personally 
we had always been on excellent terms. 

Dietrich most certainly realized the precariousness of Germany’s 
financial and credit situation, but was unable to find a way out of 
the impasse. In Ludwigsburg he confirmed that in 1932 the burden 
of unemployment relief for the Reich alone, i.e. without the addi- 
tion of local relief, amounted to three milliard marks which had 
had to be spent without any economic return. To which I was able 
to reply that my “Mefo”-exchange* scheme of relief for creating 
work (which played an important part in my denazification trial) 
had never amounted to more than three milliard marks per annum, 
but with this difference — ^that it was accompanied by a corre- 
spondingly increased production. 

Yet another little incident came up for discussion at Ludwigs- 
burg. The President asked Dietrich what Briining, in his capacity 

* For the explanation of this “telescope ’’ name see page 317. 



294 My Seventy-Six Years 

of Chancellor, had actually said about my speech. Dietrich was 
obliged to answer that he had done his best to get Briining to act 
but that Bruning had replied that he (Dietrich) needn’t upset 
himself; — ^the Government was quite used to such attacks — and 
worse. 

In December 1931, when taking our son Jens to Rostock 
University, I had a bad motor smash. Going at fiill speed five miles 
from the little town of Waren in Mecklenburg, the chauffeur 
got on to ice like glass. The car overturned. My son and the driver 
were unhurt and able to get out of the car, but I had to be carried 
into a house on the main road suffering from concussion, and lay 
for two hours unconscious. When I came to I could not move my 
legs. I spent three weeks in hospital at Waren until the brain had 
recovered from the loss of blood ; after that I hobbled about on 
crutches for another two weeks at Giihlen till at last I had regained 
the full use of my limbs, 

I did not bother about Party politics. On the ist June 1932 
Papen’s Cabinet went into action. When the Cabinet was being 
formed there was only one occasion when I expressed an opinion 
and that was in reply to an enquiry as to who could be Minister of 
Finance, when I said they should choose Count Schwerin von 
Krosigk, hitherto Permanent Secretary in the Ministry. 

Meanwhile, unemployment figures continued to rise steadily. 
Efforts had been set on foot under Briining, and continued by 
Papen, to create work through State relief in form of so-called 
labour vouchers ; but they could not affect conditions to any great 
extent because the ratio of such relief to the millions of unemployed 
was totally inadequate. 

In the field of foreign policy, on the other hand, Papen con- 
tinued BrUning’s attempts to bring about the end of reparations, 
not merely de facto but also dejiere by means of a treaty. Thanks 
to Briining’s preliminary ' work, Papen succeeded in writing a 
judiciary finis to reparations at the Lausanne Conference in the 
latter half of July. Had this success been made the subject of timely 
propaganda it might well have influenced popular opinion in 
favour of the Papen regime. Unfortunately such endeavours came 
much too late, for only a few days after the success at Lausanne 
the Reichstag elections — ^instigated by Papen — ^took place. They 
achieved the unprecedented result of two hundred and thirty 
seats for Hitler, making the National-Socialists the largest party 
in the Reichstag. From now on no Government could obtain a 
majority in the Reichstag without either the National-Socialists or 
the Communists, who had managed to secure eighty-nine seats. 



The Harsburg Front 295 

The following months were occupied with attempts to induce 
Hitler to participate in a Coalition Government in which, at most, 
he would take second place. In 1931, when I had commended him, 
such an attempt might still have been possible. Now, as head of 
the largest Party, Hitler demanded the lead. The absurd part of it 
was that this politician — already regarded with fear as a future 
dictator — was able to base his cldm on the recognized principles of 
democratic parliamentary government, whereby the leader of the 
strongest Party has at least the right to be entrusted with the 
attempt to form a new Government. 

I had grown up from childhood with the democratic outlook. 
In my opinion the will of the people must always remain the 
supreme law of government, no matter whether the State in ques- 
tion were a republic or a monarchy. For this reason I regarded 
it as certain that a Government under the chancellorship of Adolf 
Hitler could no longer be avoided if one did not wish to run the 
risk of military dictatorship and civil war. I was, however, opposed 
to both these possibilities. 

After the uncertainty and feebleness of successive Governments 
who had allowed unemployment figures to increase to six million, 
the election results of the 3i8t July 1932 ehabled me to look for- 
ward again for the first time to the possibility of an uninterrupted, 
steady and energetic Government. The motive that caused me to 
emerge from my hitherto zealously guarded retirement sprang from 
the many things I had learned from my occasional conversations 
with National-Socialist political economists. If men like Gottfried 
Feder and Rower were to gain control of the banking and mone- 
tary system, I could see already that it would spell ruin for 
German economic policy despite the parliamentary strength of a 
Hitler Government. The work of the Reichsbank — at whidi I had 
laboured for six years and whose foreign business had received a 
severe set-back owing to the mistakes of previous Governments 
— ^would collapse internally as well if threatened with a “feather- 
weight” {Federgeld)* shadow currency or even a splitting-up into 
locd ‘ ‘giro * ’ currencies d la Rower. I felt it my duty to prevent such 
a disaster. I therefore gave Hitler to understand, both by word of 
mouth and in writing, that if he came into power I would not 
refuse to collaborate with him. Later on this was brought up 
against me. But neither then nor later have I ever come across 
any suggestion for a possible alternative to Hitler’s chancellorship. 

* A play on Gottfried Feder’s name. Feder means both “ feather” and 
“pen”, and Schacht’s deverly-coined epithet is intended to imply that 
any “&eak” currency introduced by Feder would have nothing solid 
behind it. 



296 My First Seventy-Six Years 

When finally in January 1933 Hindenburg himself could see no 
other way out, he called a meeting of the leaders of all the Central 
Parties — ^including the Social-Democrats — ^to consult them as to a 
possible solution. None of those present had any proposal to make. 
Even Herr Weis, the chairman of the Social-Democratic Party, 
told the President that they would have to hand over the office of 
Chancellor to Hitler, in the hope that he would soon do for himself. 
Otto Meissner, Hindenburg’s Secretary of State, confirmed these 
facts on oath at the various trials and hearings which followed the 
collapse of 1945. 

There is consequently sound justification for the raising of the 
question : What were the circumstances that actually made possible 
Hitler’s rise to this position of power? The answer was given 
in June 1934 by a leading Social-Democrat, Victor Schiff, in 
the Zeitschrift fur Sozialismus {Magazine of Socialism) published 
abroad : 

“If there is indeed a point on which there is — and on which 
there could be — ^no difference of opinion among us, it must surely 
be that Hitler owes his rise and his ultimate victory essentially to 
the World Economic Crisis; to the despair of the unemployed 
proletariat, to the academically-trained youth for whom there is 
no future, to the middle-class business-men and craftsmen heading 
for bankruptcy, and to the farmers threatened with a fall in agri- 
cultural prices. In this connection, all of us have indeed been 
found wanting. It is true that we have rightly blamed the capitalistic 
order of things for the crisis, but beyond that we were not in a 
position to offer the masses anything more than mere socialistic 
phrases.” 

Such is the confession of one of the leading Social-Democrats. 
In another article, the Social-Democrat scholar Arthur Rosenberg 
wrote : 

“The force that actually mobilized the German masses after 
1930 — ^young and old, artisan and scholar — ^was the economic 
need : hunger and rmemployment.” (Quoted from Erich Mathias — 
Sozialdmocratie und Nation {Social-Democracy and the Nation), 
The History of the Idea of Social-Democratic Emigration, 1933- 

1938). 

Anyone reading these pronouncements will, I think, understand 
my resolve to risk the attempt, under a strong Government, to 
stem the tide of economic misery and provide wages and food once 
again to the six and a half million unemployed. 

After all efforts had failed to persuade lEtler to join a Cabinet 
led by one of the moderate parties, Papen once again resorted to 
the futile attempt to obtain a majority by means of new Reichstag 



The Harzburg Front 297 

elections. In these November elections the National-Socialists did 
indeed lose thirty-four seats, but against that the Communist 
gains rose from eighty-nine to one hundred. It was quite obvious 
that if Hitler did not come up to scratch the electors’ dissatisfaction 
would drive them to seek their salvation in the Left. The question 
began to crop up as to whether a military dictatorship would work 
after all ? 

The post of Chancellor now went to General Schleicher, a suave, 
political General, more at home in the atmosphere of intrigue than 
on the parade ground. He had tried first of all to find another 
candidate for the chancellorship and had contacted various individ- 
uals. He asked me, too, one day, to come and see him and suggested 
that I should take over the job. Although I immediately decided to 
refuse I was interested to discover his political view of the situation, 
and I asked him to tell me what his programme was. His statements 
were so colourless that I had time to look around the room. It was 
every bit as devoid of character as the man’s speech — ^without any 
personal touch, any sign of individual taste. The correct number 
of armchairs, some insignificant pictures on the walls, cold and 
unimpressive. Schleicher’s mode of speech, though entirely soul- 
less, was yet directed by the kind of intellect which seeks to win 
over its opponent and fails completely for lack of a single construc- 
tive idea or any kind of enthusiasm. He was the typical man- 
behind-the-scenes, cold but calculating. It must have cost him a 
great effort finally to take over the office of Chancellor and thereby 
to expose himself to public criticism. He pinned his last hope on a 
split in the National-Socialist Party. When he expressed this hope 
in my presence I broke in: 

“I think. General, that you underrate the iron discipline of 
the Party so assiduously maintained by Hitler. Anyone who tried 
to speak out of turn he would send to Coventry without more 
ado.” 

On that occasion Schleicher smiled in a superior fashion. Not 
long afterwards he ceased altogether to smile. 

On the day that Schleicher made his inaugural speech as newly 
appointed Chancellor I was dining at the house of a prominent 
member of the Stahlhelm together with Seldte, Morosowitz, 
Biilow-Schwante, and others. While we ate we listened to 
Schleicher’s speech on the radio. The longer he spoke the more 
our enthusiasm cooled. By the time we had arrived at the bombe 
glade our frame of mind had sunk to freezing-point. For sheer 
lack of ideas and psychological coldness Schleicher’s speech was 
unsurpassable; it was the death-knell of the Weimar Republic. 
Even he did not dare attempt a military dictatorship. 



298 My First Seventy-Six Years 

Three weeks later Hitler was appointed Chancellor by the 
President. I took no part in these activities, nor did I aspire to any 
ministerial position; I had hardly any contact with Hitler’s Party. 
When we met on one occasion in November 1932 I asked him 
whether he insisted on entry into the Party as a condition of 
co-operation. To my great relief Hitler replied in the negative. I 
would never have accepted a subordinate position under his 
Party jurisdiction. I wanted to preserve my freedom; I never 
became a member of the Party. 



UNDER HITLER 



CHAPTER THIRTY-NINE 


President of the Reichsbank Again 

I SAW Hitler only once during the first weeks after he took 
office, but it was on a very significant occasion. I happened to 
be in the room with a mere handful of his entourage when he 
made his first speech to the German people over the radio — ^that 
speech beg inn i n g “ Give me four years It seemed to me that for 
the first time I had an opportunity of seeing the soul of this man ; 
and I had the impression that the burden of his new responsibilities 
weighed heavily upon him. At this moment he felt clearly what 
it meant to be transferred from the propaganda ranks of the 
Opposition to a post of Government responsibility. I beheld the 
outward and visible expression of an inward emotion which was 
not just “putting on an act” — ^it was the real thing. It served to 
strengthen my hope that it would be possible to guide this man into 
the path of righteousness. 

During the negotiations over Hitler’s appointment the President 
— and probably Hugenberg also — ^had resigned themselves to the 
necessity of having yet again to sanction Reichstag elections. These 
were fixed for the 5th March 1933. Just why they had to take place 
is not clear. Not counting the Communists, Hitler’s and Hugen- 
berg’s Parties commanded a clear majority in the existing House. 
If, notwithstanding, Hitler still insisted on an election he must have 
cherished the hope (the more so since he had now attained power) 
of achieving a majority for his own National-Socialist Party. This 
would have resulted in a new situation which would have flowed 
him to form a purely National-Socialist Cabinet instead of a 
National one. The attempt proved a failure. 

Quite unexpectedly I received an invitation from Hermann 
Goering to a gathering on the 2Sth February at the residence of 
the President of the Reichstag which he occupied in his official 
capacity, I met a good number of industrialists, nearly all of whom 
were known to me and who had been invited by Goering to give 
financial backing to the Reichstag elections. I knew that most of 
those present were no adherents of the National-Socialist move- 
ment. Yet they had not refused this invitation. Goering welcomed 
the guests and explained that the purpose of the gathering was to 
raise an election fund for the Right-wing Parties, Then Hitler 



President of the Reichsbank Again 301 

arrived and expounded his political views in a fairly lengthy speech 
and in so compelling a fashion that, to my great astonislunent, 
when he had finished, Krupp von Bohlen rose and, in the name of 
the assembled guests, expressed his complete willingness to sup- 
port the Hitler Government. I was astonished because I knew that 
four weeks previously this same Krupp von Bohlen had turned 
down an invitation from Fritz Thyssen when Hitler intended to 
address industrialists in Rhineland-Westphalia. 

The company that evening subscribed a total of three million 
marks for the election fund. Hitler asked me to undertake the 
banking administration of this fund which I agreed to do. A 
tremendous lot has been written in after years to show how heavily 
in debt the National-Socialist Party was at the end of 1932. On the 
basis of my experience with the fund for the March elections I can 
only describe these allegations as ridiculous. Had the Party stood 
in need of money it could at least have claimed its share of the 
three million. Actually this was not the case. Of the three million 
marks a total of two million four hundred thousand was utilized 
by the Right-wing Parties, including the National-Socialists. At 
the end of the elections there remained a balance of six hundred 
thousand marks. One must give the National-Socialist movement 
credit for the fact that most of their propaganda was paid for out 
of the pockets of its own members. 

The burning of the Reichstag occurred only a few days after the 
35th February. Nowadays it should be quite clear that this action 
could not be fastened on the Communist Party. To what extent 
individual National-Socialists co-operated in the planning and 
execution of the deed will be difficult to establish, but in view of all 
that has been revealed in the meantime, the fact must be accepted 
that Goebbels and Goering each played a leading part, the one in 
planning, the other in carrying out the plan. It is my own firm 
conviction that Hitler himself was genuinely thunderstruck. To 
quote the words spoken later by the wife of a prominent Party 
leader, Hitler’s entourage wanted to “place the smouldering ruins 
of the Reichstag building on his breakfast table by way of a 
surprise”. At any rate the Reichstag fire furnished ihe welcome 
pretext for the final removal of the Communist Party from the 
political scene. 

The task that confronted the Hitler Government was no easy 
one. From their lowest level in the summer of 1927 the unemploy- 
ment figures had risen tremendously year by year and reached their 
first peak in the winter of 1931-32. There was an appreciable fell 
during the following summer, and the winter again saw a tendency 
to increase. The most heavily affected was the building industry 



302 My First Seventy-Six Years 

in which nearly ninety per cent were unemployed. Without large 
State orders, unemployment could not be eliminated and such 
elimination could not be achieved without the most enormous 
expenditure. The American economic correspondent Knicker- 
bocker was right when he wrote at that time — after a journey 
through Europe — ^that Germany possessed the greatest industrii 
potential in the whole of that continent but that potential was not 
being used to the full. Factories stood empty, machines were 
silent, stores were rotting and workers remained idle. 

It was only long afterwards that I learned that Hitler sent for 
Dr, Luther, the President of the Reichsbank, and enquired of him 
what amount the Reichsbank could contribute towards the creation 
of employment. After thinking it over Luther is reported to have 
mentioned the sum of a hundred and fifty million marks. If this 
report is correct one can understand Hitler’s disappointment at 
the result of his discussion with Luther. The figure given would 
have been just sufficient to provide exactly four days’ and five 
hours’ work for the total number of German unemployed at a wage 
of five marks a day — ^precisely as useless as the three milliard marks 
unemployment benefit which had vanished like smoke in 1932. 

In the middle of March 1933, Hitler sent for me and put ffie 
same question to me as he had done to Luther, without however 
breathing a word of his conversation with the latter. 

“Herr Schacht, I am sure we are agreed that at the moment 
there can be only one urgent duty for the new national Govern- 
ment, and that is to do away with unemployment. For this it 
will be necessary to find a very large sum of money. Do you 
see any possibility of raising such a sum — other than tlurough the 
Reichsbank?” 

‘ ‘ I agree with you entirely, Chancellor, that it is essential to wipe 
out the unemployment figures. But no matter what money can be 
extorted from other sources, it would stiU be quite insufficient for 
the job. You won’t be able to avoid recourse to the Reichsbank.” 

Hitler considered the matter and then asked me the same 
question — I learnt afterwards — ^that he had asked Luther. “Have 
you any general idea of the amounts involved?” 

“I believe it is quite impossible to give any definite figure today,” 
I answered. “It is by no means clear as yet with what orders we 
are able and willing to set the wheels turning again,” 

“But surely you must be able to say to what extent the Reichs- 
bank can — and must — ^help.” 

“lam honestly not in a position. Chancellor, to mention any 
particular sum. My (minion is this: Whatever happens we must 
put an end to unemployment and therefore the Reichsbank must 



Prendent of the Reichsbank Again 303 

furnish whatever will be necessary to take the last unemployed off 
the streets,” 

There was a short pause ; then Hitler looked at me and asked ; 
“Would you be prepared to take command of the Reichsbank 
again?” 

I realized the far-reaching import of this question. I would have 
preferred it if Briining had asked me the same thing in July 1931. 
Maybe many things would have turned out differently, Briining 
had not done so. Now, the question had been put before me by a 
Chancellor with whose general outlook and propaganda, political 
fighting methods and even individual actions I frequently did not 
agree. Should I let such considerations influence me to the point 
of refusal, or should I devote my energies to the saving of six and a 
half million unemployed? 

During the denazification trials to which I was subjected after 
Germany’s collapse the same idiotic assertion was made again and 
again; “If you had not helped Hitler he would have failed in his 
efforts.” My accuser in the Luneburg court made the utmost 
capital out of this statement ; I was acquitted at Luneburg just as I 
was acquitted at Ludwigsburg and Numberg. On that occasion 
I retorted with understandable heat: “I don’t believe Hitler de- 
pended only on me. He would have found other methods and 
other assistance; he was not the man to give up. You, sir, would 
have been glad if Hitler had perished without my help. But the 
whole of the German working class would have perished with him, 
and even you would not have advocated that.” 

Since I was now given the opportunity of ending unemploy- 
ment for six and a half million persons, all other considerations 
must give way. 

“I shorild not think it very fair, Chancellor, were I to be placed 
in a position that would involve Herr Luther, the President of the 
Reichsbank, being driven out of office,” 

“I don’t expect you to do anything of the kind. In any case 
Herr Luther will not remain President of the Reichsbank. I have 
other uses for him.” 

“If that is so, then I am prepared to resume office as President 
of the Reichsbank.” 

On the 17th March 1933 — almost exactly three years since my 
voluntary resignation — ^I resumed office, this time under far more 
difficult conditions than at the end of 1923, and with far greater 
responsibility. It was not from personal ambition, or agreement 
with the National-Socialist Party, or greed of gain that I took up 
my former post, but simply and solely out of burning anxiety for 
the welfare of the great masses of our people. 



304 My Seventy-Six Years 

My salary under the Weimar Republic was two hundred thou- 
sand marks. In 1924 it had been fixed at the same level as that of 
the Agent-General for Reparations. There were obvious reasons 
why it should remain at the old figure. To my enquiry Hitler 
answered that he left it to me to fix my own salary. I decUned his 
offer and asked for a triumvirate, consisting of the Minister of 
Finance, the Minister for Economic Affairs and myself. I suggested 
to this triumvirate that my salary should be fixed at thirty per 
cent, of the former figure, i.e. at sixty thousand marks, to include 
all my official expenses, and so it was arranged. My object was to 
set an example to the Party bosses, that they too might keep their 
remuneration within reasonable bounds. Unfortunately they did 
not do so. 

The first work-creation programme to be decided upon by the 
Cabinet was the so-called Reinhardt Programme, which aimed at 
the repair and reconstruction of houses, factories and machinery. 
It was intended especially to benefit the building industry — ^the 
hardest hit of all — ^which, as a key industry, is universally and at 
all times acknowledged as the employer of auxiliary industries. 
To this programme the Reichsbank contributed the sum of one 
milliard marks. 

The second job to be tackled — ^and it was tackled very soon — 
was the construction of national Autobahnen.* For this I sanctioned 
an initial credit of six himdred million marks which, however, 
was to be repaid out of the national Budget. Within a very short 
time the State Railways Board took over the completion and 
running of the Autobahnen. With the object of making the Auto- 
bahnen pay, I had stipulated with Hitler at the beginning that road 
and rail traffic must work in-and-in with each other. Why this 
purpose should have been lost sight of I am unable to say, since in 
course of time, and after I had received back the six hundred mil- 
lion marks for the Reichsbank, I had nothing further to do with 
the Autobahnen construction. 

Quite by chance, I was instrumental in getting Herr Todt, the 
engineer, appointed to the Autobahnen job. When in the summer of 
1933 I had come straight from the World Economic Conference 
in Berlin, Hitler mentioned during our conversation that he had 
two candidates in view — one was Herr Todt and the other Herr 
Gottfried Feder. 

“Then, Chancellor, I would recommend that you engage Herr 
Todt.” 


Highways for the use of motor traffic only. 



President of the Reichsbank Again 305 

“Why? Do you know Herr Todt?” 

“No, but I do know Herr Feder.” 

Todt applied himself to his appointed task with quite outstand- 
ing success. Maybe Hitler did not forget my part in the above- 
mentioned conversation. Maybe he also wanted to acknowledge 
the financial initiative I had shown at the beginning of the Auto- 
bahnen. Whatever the reason, I received an invitation'to drive with 
him in his own car to the opening of the first Autobahn section 
from Frankfurt-am-Main-South to Darmstadt — an invitation 
which I naturally accepted with pleasure. The car cut through the 
white ribbon stretched across the entrance to the Autobahn and we 
drove slowly along the first section, lined on either side with 
spectators whose enthusiastic cheers obviously delighted Hitler. 

When we reached the other end Hitler took the drive-past of the 
numerous cars which followed three abreast, causing him to 
exclaim with beaming face : “ They can even drive three in a row ! ’ ’ 

Besides these special work-creation tasks, the Gauleiter in tvtty 
district throughout the country endeavoured to carry through all 
those projects hitherto held up for lack of money or recently asked 
for. It is necessary to put oneself in the place of rm-al councils 
and provincial governors who, dependent solely on a niggardly 
budget, had been compelled during recent years to postpone or 
abandon so many undertakings in their districts which they would 
gladly have carried out in the interests of the population and the 
business community. These included the construction of roads, 
dykes and embankments, canalization, land clearance, drainage 
and irrigation, land-settlement buildings, hospitals, old people’s 
homes and similar enterprises awaiting completion in every part of 
the country. 

After the collapse of Germany, national, provincial and county 
officials were constantly blamed for having so readily offered 
their services to that "criminal ’’ Hitler. But under Hitler they now 
received a steady supply of funds which enabled them to carry out 
all the works in which they had long been interested and which pre- 
vious Governments had ititherto refused to sanction. Most of them 
experienced an upsurge of positive inspiration now that at last 
they were able once again to produce really worth-while work in 
the districts under theiradministration. An analysis of the National- 
Socialist “philosophy” was right outside their scope: all they 
wanted was that the immediate effect of Government activities 
should be to promote business and satisfy the population. Reports 
from individual districts and coimties piled up showing that 
unemployment had decreased by so-and-so-much or had perhaps 
even been done away with altogether. 



3o6 My First Seventy-Six Years 

As regards the “philosophical” conflict of outlook, that- 
according to present-day expression — ^had to be carried on at a 
higher level. That was first and foremost the Reichstag’s job. It 
was here I experienced my first big disappointment. 

The combined Right-wing Parties in the Government comprised 
sixty per cent of the Reichstag, of which the National-Socialists 
alone amounted to nearly fifty per cent. The Reichstag was there- 
fore fully able to carry out the ideas of the Cabinet. Only in deci- 
sions involving constitutional changes was a two-thirds majority 
necessary. Undesired constitutional changes could not be carried 
through by the National-Socialists alone. The non-National- 
Socialist Right-wingers and the remaining moderate Parties had it 
in their power to compel obedience to the rules of the constitution. 
Why, under these circumstances, an Enabling Bill was introduced 
on the a3rd March 1933, which gave the Government authority 
to make constitutional changes, was and remains a complete 
mystery. The Reichstag surrendered its powers of control without 
any need to do so, thereby creating the legal basis for practically all 
the measures to which Hitler later resorted in defiance of the 
former constitution. 

I attended that session of the Reichstag as a spectator on the 
platform, and saw with increasing disappointment how the 
moderate Parties threw away their own chances. With this Enab- 
ling Law of the 33rd March 1933, all opposition to the Hitler 
regime was rendered impossible. It is to this law that Hitler owed 
his dictatorship. The fact that the National-Socialist movement 
was able to develop into the largest Party in the Reichstag was due 
to the incompetence of previous Governments which had been 
incapable of coping with the nation’s economic distress. The fact 
that Hitler attained to dictatorship is due to those members of the 
Reichstag moderates who voted in favour of the Enabling Law. 
Among these deputies were a fair number of men who, by a 
curious coincidence, today occupy leading political positions in the 
Federal Republic of West Germany, and who extol parliamentary 
democracy as the alpha and omega of the German constitution. 

During the following months I was unfortunately compelled to 
witness how the Central Parties pursued their self-debilitation to 
the point of sxiidde. One after another the moderate Fatties 
disintegrated. The Reichstag deputies who had been elected by 
the people to represent the interests of the people repudiated the 
undertaking they had given to their electors ; of their own free will 
they renounced their power and their influence without consulting 
those same electors. Democracy had dug its own grave. 



CHAPTER FORTY 

A Visit to Roosevelt 

T he world economic crisis had been checked. The break- 
down of international money and credit business had 
persisted for nearly three and a half years and in the United 
States the new Government of the Democratic Party, which had 
been in office since January 1933, was pressing for a general 
economic conference which should bring about a solution of the 
international economic tangle. The Allied Powers agreed to call 
this conference in London. It took place in June and July 1933, 
and was attended by representatives of more than sixty countries 
from all over the world. 

First of all by way of preparation for this World Economic 
Conference, Ramsay Macdonald had gone over to New York from 
Great Britain in the spring of 1933 for discussions with the new 
President, Franklin Delano Roosevelt. 

Shortly before Macdonald arrived in New York, Roosevelt 
astonished the world by devaluing the dollar by forty per cent — 
the same proportion by which Great Britain had devalued the 
pound sterling in September 1931. The reasons which urged 
Roosevelt to take this step were not, as in London, due to the 
country’s financial needs. America possessed the greatest amount 
of gold; the dollar was the most stable currency in the world. 
Owing to the First World War, the United States balance of pay- 
ments had developed in most striking fashion in favour of the 
Americans. From the point of view of currency or financial policy 
there was not the slightest incentive to devalue. 

If, despite this, ibneiica was still set on devaluation, it was 
obviously because she wanted to reap the same commercial 
advantage that Great Britain had done from her devaluation of 
sterling. The first effect of monetary devaluation is always to 
lower the price of exports from the devaluing country. The 
British devaluation of 1931 contributed in corresponding measure 
to the increase of British exports. Roosevelt’s aim was frankly to 
coimter this artificially created preference in favour of Britain. 

It is easy to imagine that the discussion between Roosevelt and 
Macdonald did not precisely lead to any pronounced harmony. 
Monsieur Herriot fared better. France had appointed him her 



3o8 My First Seventy-Six Years 

representative at the World Economic Conference and sent him 
first as emissary to Roosevelt. French policy had always under- 
stood how to win the sympathy of other nations by focussing 
attention on the cultural aspect of her mission. For decades past 
Paris has been and remains the goal of every globe-trotterwho seeks 
artistic, intellectual and material recreation. 

The German Government too had to send a representative to 
Roosevelt for the preparations for the World Economic Conference. 
I was chosen for this position. I arrived in Washington in May, 
accompanied by sundry Government and Reichsbank officials. My 
stay there lasted eight days* 

On the occasion of my first visit President Roosevelt received 
me on the terrace of the White House, leaning on two sticks, one 
of which he was able to dispense with when he needed to use his 
hand by leaning on the arm of his companion. At the age of thirty- 
nine he had been stricken with infantile paralysis which had 
deprived him of the use of his legs. By a tremendous effort of will 
he had overcome this handicap and was a keen swimmer — the 
only sporting exercise that was left to him. Roosevelt was a heavily 
built, handsome man of great stature. In company he was naturi 
and unconstrained and possessed that kind of compelling politeness 
that does not jar only because it is always accompanied by a jest. 

Together we went into his study where the sofa received the full 
impact of his two hundred odd pounds avoirdupois. This initial 
conversation was followed by three others, all of which took place 
in this same room. He was without doubt a political gambler on a 
grand scale; highly intelligent and, for all his frankness, possessed 
of a peculiar reticence, a man who thought first of his position as 
leader of his political Party and only second of his responsibilities 
in relation to the economic situation. When I met him in 1933 his 
face was not so deeply lined as it later became. He was clean- 
shaven. His hair, which had already begun to recede from the 
forehead, showed the first streaks of grey. 

The diplomatic courtesies were punctiliously observed where 
I was concerned. First there was a big luncheon at the White 
House at which Roosevelt presided. On another evening Cordell 
Hull gave a dinner in my honour, and also in honour of the 
Chinese representative who likewise had come to take part in the 
preliminaries of the World Economic Conference, I met this 
Chinese gentleman for the first time in Washington and had many 
talks with him later in Berlin, where he called on me officially and 
was also a guest in our house. His name was H. H. Kung, brother- 
in-law of Chiang Kai-Shek who, like Kung, had married into the 
well-known Soong family. 



A Visit to Roosevelt 


309 

I am reminded of a little episode at that dinner. I was on Cordell 
Hull’s right, and on the left of the then Secretary to the Treasury, 
whose name escapes me. An orchestra as usual was dispensing 
music — as of course they invariably do in order to cover up any 
embarrassing moments in the conversation — when I suddenly 
became aware of a performance in an idiom completely new to me. 
At the end of the number Kung remarked: “That sounds almost 
like Chinese music.” 

My neighbour, the Secretary to the Treasury, turned proudly 
towards me and whispered: “That’s a real feather in my cap. I 
wrote that piece especially for this reception to the Chinese 
delegate.” 

From which I gathered that the head of American Finance was 
not so overwhelmed by his duties as was the case at home in 
Germany. 

Roosevelt and Hitler came into power almost at the same time. 
Both owed their election to a previous economic depression. Both 
were faced with the task of resorting to State intervention to crank 
up the economic engine. But while Roosevelt was able to dip into 
a full purse. Hitler’s coffers were empty. The measure taken by 
Roosevelt to restore the national economy was summed up under 
the title of the “New Deal”. This designation was, I assume, the 
reason why, when I introduced the bilateral economic policy, my 
staff at the Ministry for Economic Affairs labelled my measures 
“New Plan”, 

My first professional discussion with Roosevelt showed me that 
Herriot, who had left Washington only one day before I arrived, 
had managed to draw him completely into the orbit of French 
interests, and I had much ado to convince him, by describing 
conditions in Germany, that German problems were essentially 
of more decisive importance than the French. Nevertheless, I 
succeeded in doing so during other conversations. I began slowly 
to prepare Roosevelt for the fact that even after the abolition of 
reparations it would be impossible for Germany to continue the 
interest and amortization in foreign currency of the numerous 
loans which, notwithstanding my warning, had been made to our 
country between 1934 and 1930. 

After gently paving the way for Roosevelt I seized the bull by 
the horns at a discussion wMch took place in his office, and at 
which the Foreign Minister, Cordell Hull, and our German 
Ambassador, Dr. Luther, were also present. I stated bluntly that 
in a very short time Germany would be compelled to cease pay- 
ment of the interest on the American loans. Cordell Hull grew 
nervous. Luther fidgeted in his chair. I myself expected an indig- 



310 My First Seventy-Six Years 

nant outburst on the part of the President. To our astonishment 
there was nothing of the sort, Roosevelt gave his thigh a resounding 
smack and exclaimed with a laugh ; “ Serves the Wall Street bankers 
right!” 

Cordell Hull did not dare to intervene. Luther breathed again, 
and I changed the subject as quickly as possible. At the moment 
when I made my statement Roosevelt — ^who had been elected 
against the wish of the Republican-minded New York banking 
circles — ^put the interests of his coimtry second and thought 
only of the loss to his old antagonists. For a moment the Party 
member prevailed over the Statesman. 

The next day saw a little sequel to this incident. I was asked to 
call upon Cordell Hull in the State Department. In his buttoned-up 
frock-coat he came forward solemnly and handed me an envelope 
with the brief words : 

*‘I am to give you this from the President.” 

I took the envelope and asked whether I should read the letter 
immediately, to which Hull replied in the affirmative. It was a very 
short note and consisted solely of the information that the Presi- 
dent had been much shocked by my statement of yesterday. It 
occurred to me that the President had not experienced any shock 
until twenty-four hours had elapsed, but I naturally preferred to 
replace the note without comment. There was a brief, formal 
conversation before I took my departure. 

Cordell Hull was the exact opposite of the Roosevelt type. Where 
Roosevelt had about him something of the modern manager who 
acts according to impulse and intuition, Cordell Hull seemed to 
have stepped directly out of the era. of Abraham Lincoln. Lean, of 
middle he^ht, with slightly bowed head and tightly compressed 
lips, he held himself always very erect, avoided any animated move- 
ment and preserved a totdly uninterested countenance even in face 
of the most interesting topic. His old-fashioned frock-coat, of 
equal length in front and behind, was always impeccably buttoned. 
Round his neck he wore an old-fashioned stock. I have always 
pictured the typical ” old colonial gentleman” as being exactly like 
Cordell Hull. 

Whenever I had a few hours’ leisure I would leave the Mayflower 
Hotel and go for short trips through the city and out to the cele- 
brated Mount Vernon. At that time Washington was not so over- 
grown nor so overrun with bureaucratic oflices as it is now. In the 
twelve years of Roosevelt’s administration bureaucracy in the 
United States rose to almost incredible proportions. We gained a 
pretty good insight into this state of affairs through the innumerable 
American officials who installed themselves in Germany after the 



A Visit to Roosevelt 31 1 

collapse. At the time of my visit, however, Washington was still a 
lovely residential city, with attractive Embassies in widely differing 
architectural styles, each country being at pains to create a bit of 
home even in the construction of its diplomatic residence. The 
German Embassy provided a regrettable exception. Since we had 
lost the former building through the war, our Embassy was now 
housed in a rented building several storeys high which certainly 
did not present any atmosphere of comfort. 

When I took leave of Roosevelt in his private room he motioned 
me to the sofa and said: 

"You have made an excellent impression here because from 
every point of view you have spoken frankly and sincerely.” 

I thanked him and bade him good-bye in the hope that my visit 
had not been altogether in vain. 

I was due to sail the next evening. The liners as a rule left New 
York Harbour after midnight. I was able, therefore, to accept the 
invitation of a Jewish friend who had asked me if I wouldn’t come, 
just once, and talk to a group of his friends about the anti-Semitism 
of the National-Socialists. I was well aware that here was a subject 
with which I could achieve no result, be it handled never so tact- 
fully or so delicately. On the other hand I too felt the need at any 
rate to make an effort to discuss these anti-Semite sentiments with 
Jewish circles — sentiments which had been artificially stimulated in 
Germany to a great extent but which had not once made their 
appearance in the rest of the world. 

The friend who invited me was David Samoff, an outstandingly 
able, well-informed man on matters of international policy. He had 
accompanied the American Delegation to the Young Conference 
in Paris in 1929 and had shown himself consistently kind and 
helpful to us Germans. He had come to America from Russia as a 
boy of ten, and by his keen intelligence and energy had worked his 
way up to the top of the tree in one of the largest radio companies. 
In his tastefully furnished private house in New York he gave a 
most delightful dinner-party at which some twelve to fourteen 
men were present— all Jews with the exception of Owen D. Young, 
Al Smith (the Catholic candidate for the Presidency) and the 
General Secretary of the Young Men's Christian AMOciation. 
The Jewish guests were known to me either personally or by 
name. That evening I met the well-known Chief Rabbi, Wise, for 
the first time. 

After dinner I spoke, as was my habit, as frankly, as decently 
and tactfully, but also as honestly as possible. But the fact that 
there was no discussion showed me that, as was to be expected,. I 
had convinced no-one. Nevertheless my host shook hands warmly 



313 MylFirst Seventy-Six Years 

as he saw me to the door and said, “Dr. Schacht, you have been 
a very good sport.” 

A few weeks after my return, from America the World Economic 
Conference met in London, to which Hitler’s Government sent a 
deputation under the leadership of the Foreign Minister, Baron 
von Neurath, and in which Hugenberg and I among others were 
included. The National-Socialist Party element was represented 
by Herr Keppler and Herr Krogmann, Mayor of Hamburg. 

The meetings of the conference split up into innumerable 
commissions and committees. The all-important subject was the 
return to stable currency conditions. Along with it, as happened 
so often before and equally often since, we discussed what measures 
could be taken from the point of view of commercial policy in 
order to set world trade going again. Despite extensive bureau- 
cratic preparation the conference lacked real leadership. And 
to expect unanimous decisions from a gathering of delegates 
from sixty countries was also perhaps not a very happy notion, 
which from the very beginning carried within itself the seeds of 
non-success. I remember that some small, entirely insignificant 
resolution was nearly lost because the representative of Afghanistan 
refused to agree to it. 

The opening of the conference — as was only to be expected in 
London — was as impressive as could be. At a Royal garden party 
we were able to shake hands with King George V and Queen Mary, 
and at the opening of the conference we listened to an address by 
the King. 

The plenary session was, as a rule, even more boring than the 
deliberations in committee. On one occasion only was there loud 
applause when DoUfuss, the leader of the Austrian delegation, 
stepped on to the platform. The first European dictator was singled 
out for attention by the democratic gathering. 

During the conference an unfortunate incident occurred within 
the German delegation. Hugenberg felt justified in handing to the 
conference ojEEce a memorandum on colonial policy which he had 
not discussed beforehand either with Baron von Neurath, our 
chairman, or with us, his colleagues. The memorandum aroused 
unwelcome attention as it was really out of place in this World 
Economic Conference. It led to unpleasant results for Hugenberg 
himself; called to account by Hiller, he resigned his offices of 
Minister of Economic Affairs and of Agriculture, thereby leaving 
a serious gap in the non-National-Socialist ranks in the Cabinet. 
He was succeeded in the Ministry of Agriculture by the National- 
Socialist romantic writer Walter Darrl, and in ffie Ministiy for 
Economic Affairs by Kurt Schnutt, hitherto managing director of 



A Visit to Roosevelt 313 

the Alliance Assurance Company, who felt impelled to don the 
S.S. uniform very quickly and thereby take his place in the ranks 
of National-Socialist bosses, although, according to his business 
and economic outlook, he was a Liberal. 

The entire World Economic Conference broke up without having 
achieved any practical result. It fell to me to make the valedictory 
speech for the German delegation culminating in the follomng 
words : 

“With the failure to come to an international agreement it now 
becomes necessary for each country first of all to put its own 
economy in order. Once this has been done a new World Economic 
Conference will perhaps stand a better chance of success.” 


II 



CHAPTER FORTY-ONE 


Conversion Fund and Mefo-hills 

I N May, after my return from America and before my depar- 
ture to attend the World Economic Conference in London, 
I called a meeting of the banking representatives of our 
creditors in other countries. They came from France, Britain, 
the United States, Belgium, Holland, Switzerland and Sweden, 
each with the intention of keeping a watchful eye on the interests 
of his creditor compatriots. It is true that they came without 
legal mandate — ^it would have been impossible to execute such a 
mandate in view of the large number of creditors — but they were 
invested with authority by virtue of the very confidence which 
the creditors of their respective countries reposed in them. 

At this Berlin Conference I submitted all financial and econo- 
mic data which proved Germany’s incapacity to continue paying 
interest on her foreign loans. Since it had gradually become dear 
that Germany could pay her debts only if she achieved corre- 
spondingly large exports, I dwelt above all on the obstacles that 
other countries placed in the way of our export trade. 

In a survey of the year at the end of 1931 the Frankfurter 
Zeitung confirmed that fantastically high tariff walls had been 
erected around those countries which had hitherto absorbed four- 
fifths of German exports. French tariffs had not only been raised, 
but for the first time tariff quotas had been fixed restricting the 
quantity of imported goods. Poland had increased her industrial 
duties by one hundred per cent. Many other countries were not 
content with increasing tariffs but followed the French example 
and restricted the quantity of imported goods by the imposition 
of quotas. Then followed the creation of import monopolies, 
special import duties, compulsion as to the expenditure on home- 
produced goods and similar measures; added to which Britain 
and several other countries had devalued their currencies, thereby 
attaining considerable advantage over Germany in world markets. 

Under no circumstances was I going to take the necessary steps 
on my own authority while, on the other hand, the creditors’ 
representatives were unable to grant me legal power of attorney. 
We therefore agreed that, after joint consultation, the Reichsbank 
would have to set matters in train. All enquiries relating to the 



Conversion Fund and Mefo-bilk 315 

above-mentioned subjects were replied to by ray staff and myself 
with the corresponding proofs. The books of the Reichsbank were 
inspected and in spite of the painfulness of having to take certain 
resolutions, it was recognized that I had put all my cards on the 
table. The principles to be followed in future were determined 
jointly by the creditor representatives and myself: 

(a) It was agreed that the Reichsbank ’s remaining reserves of 
gold and foreign exchange had reached such a low level that any 
further decline must imperil its full function as a Central Banking 
institution, and that it was desirable that these reserves be gradually 
increased. 

(b) Further, it was acknowledged that the adverse balance of 
payments situation demanded the protection of the German 
foreign currency reserves. 

(c) It was generally acknowledged that it was necessary to 
promote German exports by all possible means since only in this 
way would a resumption of payments be possible, for in the long 
run international debts can only be repaid by the free import and 
export of goods and services. 

(d) In regard to the restrictions on transfers which had become 
necessary, it was recognized that these should not be extended to 
the Dawes and Young Loans, at least not for the interest on this 
latter. 

(e) On the other hand, in regard to the remaining loans and 
debts, none should have priority over the others. At the same time 
a wish was expressed that the Reichsbank might consider the 
proposal to set aside a certain amount of foreign exchange to cover 
these liabilities for, say, the next six months. 

In addition to these principles it was agreed that, first of all, 
from the ist July 1933 onwards, the interest and amortization of 
the Dawes Loan of 1924 should be transferred in full. Of the 
Yoimg Loan, on the other hand, only the interest was to be trans- 
ferred. The transfer of amortization payments on the Yoimg and 
all other loans was to be postponed. The transfer of all other 
interest and dividends was to be cut by half. 

These arrangements show clearly that mine was no unilateral 
action. What is more, they go to prove that the creditors also did 
not wish to see a further decline in the Reichsbank’s reserves of 
gold and foreign exchange; rather, they desired that these reserves 
should be increased. In addition, it was acknowledged that Ger- 
man exports should be encouraged by every means since only in 
this manner could the transfer of monies be resumed. 

These negotiations — ^which for a time were repeated every half- 
year with changes in transfer percentages — ^bear witness to the fact 



3i6 My First Seventy-Six Years 

that the restrictions on transfers and the promotion of German export 
trade were entirely in accordance with the creditors’ ideas. That 
I was later blamed over and over again for these very measures 
betrays crass ignorance of the real circumstances. 

But even if the transfer of payments on loans had been abolished, 
I had no intention of allowing the German debtors to escape their 
liabilities. With this object in view, and by means of a law dated 
the 9th June 1933 , 1 created a so-called “Conversion Fund”, into 
which the German borrowers of foreign loans were to pay the 
amounts of interest and amortization in German Reichsmarks as 
they fell due. From time to time the Reichsbank, in conjunction 
with the Conversion Fund, then tmdertook the transfer of these 
sums into foreign currency. 

The stopping of interest pa3nnents meant, of course, that the 
foreign creditors suffered considerable loss. True, the amounts 
were credited to them in marks with the Conversion Fund but 
they were unable to change these into their own currency. In 
order that the creditors might not be left entirely unsatisfied, the 
Reichsbank authorized the Golddiskontbank to purchase these 
credits at fifty per cent of their nominal value. Dealings in these 
vouchers for mark credits, known as “Scrips”, soon became very 
lively. The profit accruing from the fifty per cent saving went to 
the promotion of export. These measures served to give practical 
encouragement to what had always been acknowledged in theory, 
namely, that the only way in which Germany could meet her 
foreign liabilities was through her export trade. Germany’s use of 
the Scrips to pay for additional exports gave the creditor countries 
an interest in buying as many goods as possible from Germany so 
as to preserve or increase Germany’s ability to transfer payments. 

In course of time, the more German marks piled up in the 
Conversion Fund the more urgently did other countries seek 
opportunities to spend those marks. Many such opportunities were 
created in the interests of the creditor countries, such as travel in 
Germany, relief work in Germany, investments in Germany, the 
purchase of certain goods in Germany, etc. This system of different 
mark categories — ^Travel Marks, Register Marks (Registermark), 
Aski Marks [Special Foreign Account Marks) has been much 
criticised and ri^culed. The fact is that it reacted to the advantage 
of the foreign creditor, the losses he had originally envisaged being 
greatly mitigated thereby. Many other countries adopted a similar 
principle after World War II. Britain, for example, has greater 
varieties of pounds sterling today than Germany then had in marks. 

In addition to the immense and difficult task of regulating the 



Conversion Fund and Mefo-hilk 3 17 

foreign loans, the question of financing the Work Creation projects 
had to be dealt with. That first milliard which I had sanctioned for 
the Reinhardt programme was insufficient, as we knew from the first 
that it would be. Further funds had to be provided, and at the 
same time a way had to be found to avoid an undue increase in the 
holding of bills of exchange by the Reichsbank, and a correspond- 
ingly undue increase in the issue of bank-notes. To raise the neces- 
sary money by a simple process of inflation would have been to 
bungle the whole business. I reflected that if there were unused 
factories, unused machinery and unused stocks (as was indeed the 
case) there must also be unused capital lying fallow in business 
concerns. To capture this capital by the issue of State loans would 
have been a hopeless undertaking. Public confidence in the State’s 
ability to pay had been undermined by previous Governments. 
It would be a matter of years before that confidence was restored. 
I had therefore to find a way of extracting this fallow capital from 
the safe deposits and pockets where it now lay, without expecting 
it to remain absent for long or to lose its value. 

From this train of thought there arose the scheme which later 
became known as Mefo-XVechsel (Mefo-bills). The name Mefo 
derives from Metall-Forschungs A.G. (Metal Research Company 
Limited), a Corporation founded, at the instigation of the Govern- 
ment, by the four big firms Siemens, Gutehoffnungshiitte, Krupp 
and Rheinstahl. The State assumed direct liability and security 
for all debts incurred by this small company. From now on, all 
suppliers of State orders tendered bills on Mefo against liieir 
requirements. The Reichsbank declared its willingness to exchange 
these bills at any time for ready cash over the counter. That is the 
quite simple and plain idea behind the Mefo-bill system. 

Where the working of the system was concerned, the State 
could use the Mefo-bills to pay for its orders to business firms, 
orders which, as time went on, were extended especially to cover 
armaments. The suppliers could immediately exdiange their bUls 
for cash at the Reichsbank. 

The question remained to what extent the Reichsbank might be 
compelled to accept Mefo-bills against cash in its portfolio. In this 
connection, what I had expected came to pass, namely that the 
money lying idle in the safes and cash boxes of business firms, not 
intended or able to be used for long-term investments, was imme- 
diately used to get possession of these short-term investments. 
Since the bills carried four per cent interest and could be ex- 
changed for ready money at the Reichsbank at any time, they took 
the place of ready cash, so to speak, and earned interest into the 
bargain. In four years the total amount of Mefo-bills had risen to 



3i8 My First Seventy-Six Years 

twelve milliard marks, and the above arrangement made it possible 
for a good six milliard of these to be taken up by the market, which 
meant that they were never presented at the Reichsbank, thus 
avoiding any inflationary development in providing funds for 
Work Creation projects, and any decline in the value of money. 

Once production had been set on its feet again — ^thanks to 
the accumulation of Mefo-bills — and the money market was im- 
proving, the Mefo-bills became a specially favoured security for 
the short-term investment of bank funds. Any Mefo-bills not 
absorbed by the market could immediately be included in 
the Reichsbank portfolio. When one considers that in 1930 the 
Reichsbank ’s holding in bills and secured loans had sunk to less 
than two milliard marks, it is easy to realize how greatly the 
turnover of goods had declined in German business and how much 
scope the Reichsbank could offer for the intake of Mefo-bills 
without thereby endangering the currency. 

It may perhaps be necessary to explain a few teclinicalities to the 
many readers not acquainted with technical expressions. The use 
of bills of exchange for trade purposes has arisen because the pur- 
chaser of a commodity has usually to wait for about three months 
before he can resell it. That is to say, he has to wait for about three 
months before he gets his purchase price back. In order to be 
able to purchase his commodity and satisfy the seller he gives 
the latter a bond, called a bill of exchange, which is payable after 
three months have elapsed. The solvency of such bills is governed 
by a very strict law relating to bills of exchange which makes this 
method a very favourite one for trading purposes. On receipt of 
a bill three months’ interest is deducted, i.e. the bill is discounted, 
to use the expression derived from Latin. The rate at which the 
deduction is reckoned is the rate of discount. A bill of exchange can 
be used, or misused, as a form of payment for debts which are not 
backed by any purchase of goods. They are then known as accom- 
modation bills. The Reichsbank is under obligation to accept 
only commercial bills bearing a certain number of signatures. 

From 1934 up to the outbreak of World War II, this system of 
Mefo-bills was recognized throughout the entire international 
banking world as an ingenious and well-adapted method of pro- 
viding funds. It was only after the collapse of 1945 that the 
denazification fanatics tried to set a trap for me by representing the 
system as unfair and illegal. The cabinet-makers, conunercial 
clerks, registrars, actuaries, etc, (the judicature in the denazification 
tribunals), knew nothing of the economic needs of the ’thirties, nor 
could they understand the relevancy of the Mefo-bill system. 

In spite of being informed to the contrary both by the Adminis- 



Conversion Fund and Mefo-bilh 319 

trative Court and the Supreme Administrative Court in Hamburg, 
Max Brauer, President of the Hamburg Senate, i.e. the highest 
official of this commercial City-State, was not ashamed, despite 
these two verdicts, and under the cloak of his State immunity, to 
describe the Mefo system as a swindle. I quote a few sentences from 
the verdict of the Supreme Administrative Court of Hamburg : 

“The Directorate of the Reichsbank was acting within the 
framework of reasonable monetary objectives when, in considering 
methods of providing funds in advance, they took into account 
the fact that to increase the volume of money would also lead to an 
increase in production. In conjunction with State measures for 
creating employment, the system of Mefo-bills was well adapted 
for this purpose. It constituted a workable foundation for the 
overcoming of the economic depression. By abandoning its obstin- 
ate adherence to the cover principle, for which the former manage- 
ment of the Reichsbank has been blamed, and by endeavouring 
to carry out the functions of a modern business bank by providing 
funds for State investments, the Reichsbank acted according to 
the dictates of sound judgment.” 

In the meantime Herr Schnoitt, Federal Minister for Economic 
Affairs, was tackling his job with considerable zeal but was for ever 
encountering opposition from Party groups in his endeavours to 
maintain a common-sense economic policy in face of the Party’s 
unseemly and absurd demands. He soon tired of the struggle, the 
more so as he was unable to do anything to remedy the conditions 
which tended constantly to decrease Germany's foreign exchange 
receipts. A temporary indisposition while making a speech, gave 
him the opportunity to ask Hitler to release him from his post. 

Hitler had spoken to me now and again about the foreign 
exchange situation. On one occasion I attended a joint discussion 
at his office together with von Krosigk, the Minister of Finance. 
He turned first to von Krosigk with the enquiry as to how one 
could improve the foreign exchange position. When Krosigk failed 
to give a definite answer Hitler turned to me : 

“What would you do, Herr Schacht, if you were Minister of 
Economic Affairs?” 

My reply came pat and plain; 

“ I would never buy any more than I could pay for, and I would 
buy as much as possible from those countries whobought from me.” 

We parted that day without having come to any further decision. 
On the 26th July 1934 , 1 received a sudden phone call summoning 
me to Bayreuth where Hitler was staying for the Festival. 

Hitler had established himself in a villa rented for the Festival 



320 My First Seventy-Six Years 

by Victor Lutze, S.A. Chief of Staff, There I unexpectedly met 
von Papen who, like myself, had been summoned by telephone. 

Hitler first had a talk with von Papen on the morning of the 27th 
July while I sat with Victor Lutze’s wife on the veranda. Frau 
Lutze, a well-proportioned blonde, wore a simply made light blue 
summer frock; her children, too, were present, and it was easy to 
see that she was a good mother. 

After some little while von Papen came out and told me that he 
had signified his willingness to go as Ambassador to Vienna. 

Then I was bidden to Hitler, who informed me that he had been 
turning over our recent conversation in his mind. 

“Owing to his illness the Federal Minister, Herr Schmitt, will 
not return to his duties. I must find someone else for the post and 
would like to ask you, Herr Schacht, whether you would be 
prepared, in addition to your office of President of the Rcichsbank, 
to take over the Ministry of Economic Affairs ? ” 

Once again I saw myself confronted with a weighty decision. 
The lines along which the Party had developed; the way its 
bosses interfered in every phase of government; their efforts to 
get as much power as possible into their own hands; their out- 
rages against the Jews; the way they held the Churches up to 
ridicule ; all this had meanwhile become as patent to me as to the 
rest of the world, and I condemned it as scathingly. Worse than 
anything had been the events connected with the R6hm Putsch 
barely four weeks previously. Where, I asked myself at the time, 
could one begin to curb or prevent the abuse of Governmental 
power and Party rule. There remained the one and only possibility 
of working from within outwards, of making use of those very 
Governmental activities in an attempt to combat the excesses of the 
system and direct its policy along decent lines. As Minister for 
Economic Affairs I should have a much greater opportunity to 
put these ideas into practice than was the case in my capacity as 
President of the Reichsbank. 

I signified my acceptance in principle but there was one matter 
I wished to have cleared up. 

“ Before I take office I should like to know how you wish me to 
deal with the Jewish question ? ” 

“In economic matters the Jews can carry on exactly as they 
have done up to now.” 

I took note of this answer and quoted it later whenever I had 
occasion to discuss the question of the oppression of the Jews with 
Hitler. As long as I remained head of the Ministry for Economic 
Affairs I protected every Jew against illegal economic injury at the 
hands of the Party. 



CHAPTER FORTY-TWO 


A Stronghold of Justice 

I TOOK over the Ministry of Economic Affairs barely four 
weeks after the Rohm rebellion. At that time I was far too 
deeply immersed in my duties to pay particular attention to 
revolutionary tendencies in any special section of the Party. In 
this way I remained unaware of all the details concerning the 
preparation of the plot : in fact the press reports of the actual coup 
took me by surprise. 

On the previous evening I had expected Dr. Goebbels and his wife 
to dine with us. My secretary had repeatedly telephoned Goebbels’ 
home to ask what had happened but had received no reply. 

The little doctor who, through his Ministry of Propaganda, 
exercised such a baleful influence not only on the German 
people but also on Adolf Hitler, was my enemy by instinct. He 
hated me. In his opinion economics were a necessary evil. He was 
certainly in no mind to allow his position as "first intellectual” to 
be filched from him by the Government’s economist. 

Since I don’t like being involved in unnecessary intrigues and 
enmities I had invited him to dirmer, but, as already mentioned, 
he did not come and the next morning I learnt the reason for his 
discourtesy. In Munich and its neighbourhood, imder Hitler’s 
direction, a Putsch on the part of SA.. “high-ups” had been sup- 
pressed and many people shot, among them several who had noth- 
ing to do with the SA., such as Edgar Jung, a colleague of von 
Papen, Klausner, Permanent Secretary, Gregor Strasser, General 
Schleicher and his wife, and others. 

Looking back, we know now that at that time an action was 
undertaken in the course of which one group of interests within 
the Party, headed by Hitler and including Goering, Heydrich, 
Himmler and Goebbels, rendered the other group Immless. The 
fact that individual satraps took advantage of the event to settle 
their private feuds and add them to the general account, puts a very 
black complexion on the whole affair. 

When I learned of the first details I shuddered. During periods 
of consolidation following a latent civil war such happenings 
may be unavoidable. What frightened me was the mendacity and 
slipperiness with which the facts were distorted or hushed up. 

II* 



323 My First Seventy-Six Years 

Although several hundred people had lost their lives — among 
them a man in Munich, a victim of mistaken identity — Hitler, in 
his Reichstag speech of the 3rd July 1934, gave the number of those 
shot as only seventy-seven. Even among those seventy-seven there 
were names which obviously had nothing to do with the R5hm 
revolt. 

In a history book which appeared a year later, the event was 
summarily dismissed with the statement that Hitler, as “the 
Supreme Justiciary of the German People”, had delivered the 
conspirators to their well-deserved punishment. If this statement — 
that Hitler was the Supreme Justiciary — ^was intended to include 
absolute power over the life and death of individual citizens without 
trial, it was indeed a monstrous assertion. I could not refrain from 
saying to Hitler when I saw him after this event : 

“How could you ever take upon yourself the responsibility of 
determining the fate of human beings without any judicial proceed- 
ings? No matter what the circumstances, you should have allowed 
the trials to take place, even if they had only been summary 
trials.” 

Curiously enough, Hitler took this quietly, replying with a few 
unconvincing excuses. 

I was still more indignant that a man such as Giirtner, the 
Minister of Justice, whom I had known as a fair-minded man, 
should submit to the Cabinet a draft Bill according to which the 
shootings of the 30th June were “lawful ”. These executions and 
murders could never have been “lawful”. Not a single legal 
prescription existed which would have supported such action. It 
might be possible to decree indemnity, but not to define wrong as 
right. 

These latest experiences showed me more clearly than ever the 
path I must follow. I must endeavour by every means, both 
within the Cabinet and in my own department, to uphold right 
and justice whenever and wherever occasion offered. 

I began to look about for allies — ^but where were they? The 
military had meekly accepted the fact that General Schleicher, 
one of their most prominent members, had been murdered. The 
civil ministers had pronounced the shootings of the 30th June to 
be “lawful”. The political Parties of the Centre had jointly and 
severally dissolved of their own accord. Von Papen had made a 
courageous speech in Marburg in May 1934 in which he had 
openly warned his hearers against the deriding of Christian 
principles as practised by Hitler’s adherents within the Party; 
but after he too had been threatened on the 30th June, he had 
resigned his membership of the Cabinet and his post of Vice- 



A Stronghold of Justice 333 

Chancellor, and a few weeks later had been appointed Ambassador 
in Vienna. 

Could help still come from S.D.P. circles ? At the opening of the 
new German Bundestag in 1948, the former Social-Democratic 
Minister, Paul Lobe, in his capacity of Honorary President, 
began his opening speech by recalling the memory of the Social- 
Democrats’ heroic resistance during the “last session of the 
Reichstag” on the 33rd March 1933. On that day the Social- 
Democratic Party did indeed vote solidly against the Enabling 
Law. But Herr Lobe deliberately misled the public when he 
described the session of the 23rd March as the “last session of the 
Reichstag”. The last session of the Reichstag took place on the 
17th May 1933, when something very curious happened. 

Herr Severing, a witness at the Niimberg trial, and Herr 
Rossmann, the Social-Democratic deputy who was a witness at my 
denazification trial at Ludwigsburg, unanimously stated that from 
the very first they had recognized Hitler as a War Chancellor. 
The whole electoral contest for the 5th March 1933 — so Rossmann 
declared — ^had been conducted by the Social-Democrats with the 
watchword that Hitler’s election would mean the road to war. 
On the 17th May 1933, those same Social-Democrats fell com- 
pletely into line with Hitler. At this session Hitler obtained a special 
vote of confidence on the subject of his foreign policy. In this 
connection not only did the Social-Democrats not vote against 
Hitler nor did they even merely abstain; they voted with dl the 
other Reichstag Parties in favour of confidence in Hitler’s foreign 
policy. They had obviously in the meanwhile come to the con- 
clusion that Hitler was not a War Chancellor. What support could 
I still expect from the Social-Democrats ? 

And what about the Church? Had not the Catholic Church 
made its peace with Hitler through the Concordat? Had not the 
Conference of Bishops assembled at Fulda on the 20th August 
1935 wired to Hitler : 

“The Bishops assembled in Fulda for the forthcoming Confer- 
ence send to the Leader and Chancellor of the German Reich their 
loyal and respectful greetings which, accordingto Divine Command, 
we owe to the holder of the State’s supreme office and authority.” 

The crime of Potempa, the hundredfold murders of the 30th 
June 1934, and all other misdeeds did not prevent the Confer- 
ence of Bishops from expressing their loyalty and respect to the 
instigator of these actions. 

Was the Evangelical Church any different? On the 27th January 
1934, after a talk with Hitler, the Evangelical bishops published 
the following declaration : 



324 ^h' Seventy- Six Years 

“Impressed by the great occasion when the leaders of the 
German Evangelical Church met together in the company of the 
Chancellor of the Reich, they unanimously reaffirm their uncondi- 
tional loyalty to the Third Reich and to its Fiihrer. The leaders of 
the Church condemn in the strongest possible terms all machina- 
tions on the part of critics of the State, the Nation and the Move- 
ment, calculated to imperil the Third Reich.” 

There remained finally only business and science. But the leaders 
of the business world saw only that under the new Government 
their anxieties concerning the employment of their factories and 
their work-people had been removed. And the scientists were 
absorbed in their studies and their research. 

By far the most hopeless from the point of view of any resistance 
were those men who had emigrated and who, while persisting in 
their convictions, were not prepared to make sacrifices on that 
account. 

I very soon realized that I could expect little help from any 
third party in my fight for justice and decency. Nevertheless I did 
not intend to follow any other path save that of justice and decency. 
And I do not believe that I have ever, for one moment, strayed 
from that path. 

On the 2nd August 1934, I took office as head of the Ministry 
for Economic Affairs. My first action was to summon the senior 
officials and urge them to arbitrate justly and impartially, and to 
tolerate no Party interference. I would support any official who up- 
held that standard. My Ministry should be a stronghold of justice. 

Again and again I was constrained to make good my word in the 
'Reichsbank as well as in the Ministry. When my Reichsbank 
colleague, Hiilse, was attacked in the Sturmer on account of his 
Jewish connections, I compelled Hitler to print a public with- 
drawal of and apology for this imult. When the manager of the 
Arnswalde branch of the Reichsbank was publicly pilloried for 
having bought goods from Jewish tradesmen, and I was unable to 
obtain a public apology, I closed the Arnswalde branch until, on 
the eleventh day, the Gcudeiter consented to apologize in public 
and to vindicate the official in question. When Sperrl, the head of 
a department, and Schniewind, a Permanent Secretary in the 
Ministry of Economic Affairs, were brought before the PublicProse- 
cutor for contravening the so-called “ Treason Law ” (^'HeimtUcke- 
gesetz'^') I threatened to resign if the two men were not released 
forthwith and the charge withdrawn. When a member of the 
Reichsbank staff, a householder, was caricatured in the Press 
because of a rent dispute, I did not rest until he had emerged from 



A Stronghold of Justice 325 

the affair ^vith flying colours. These are only a few instances that 
remain in my memory. 

Nor did I confine myself to the defence of my own departments : 
I also had recourse to attack. Immediately after my opening address 
at the Ministry of Economic Affairs, I sent for Herr Gottfried 
Feder, whom Hitler had previously appointed Secretary of State 
in the Ministry. I told him that his connection with the Ministry 
ceased on the day I took office. 

“But, sir, I am prepared to co-operate loyally with you.” 

"That may be, Herr Feder, but I am not.” 

So Herr Feder departed. He will be remembered as the inventor 
of the “featherweight currency” {Federgeld — see page 295) and 
of the “Breaking of the Tyranny of Dividends” {Brcclmig der 
ZinsenknecMschaff). 

A few days after I took over the Ministry, Himmler sent over 
his adjutant, Kranefuss, who announced : 

“My chief, sir, the head of the S.S., has instmcted me to inform 
you that he does not approve of your takin g over the Federal 
Ministry for Economic Affairs. The S.S. leader’s views on 
economic affairs differ completely from those which you intend 
to carry out. You will meet witli considerable opposition and 
unpleasantness from the S.S. Herr Hinunler therefore urges you 
voluntarily to relinquish your post and place your resignation in the 
Fiihrer’s hands, in which case Herr Himmler is prepared to leave 
you unmolested in your position as President of the Reichsbank.” 

“My dear Herr Kranefuss,” I replied, “that is really most 
interesting. Unfortunately I am not in a position to comply with 
Herr Himmler’s wishes, since the Chancellor himself has appointed 
me to this office. Please tell Herr Himmler that there are two v/ays 
of removing me from my post. The first, that he induces the Chan- 
cellor to revoke my appointment. I should immediately obey such 
an order. The second is that he shoots me from the front, for I 
don’t allow myself to be taken in the rear.” 

“I greatly regret having to deliver such a message from you to 
the leader of the S.S. You will most certainly incur the enmity 
of the S.S. thereby.” 

“I should naturally regret that very much, Herr Kranefuss. 
But even so, perhaps Herr Himmler would do me a favour?” 

“And what might that be ?” 

“ I see there are always two S.S. men in uniform outside the door 
of my study. I take it they are the guard provided for my pre- 
decessor, Herr Schmitt, in his capacity of S.S. group leader. 
Please ask Herr Himmler to withdraw these guards.” 

By the following day the guards had disappeared. 



336 My First Seventy-Six Years 

A similar incident occurred about two years later. Herr Keppler, 
whom I have already mentioned several times, had the effrontery 
to tell one of my staff that he needn’t bother to follow my instruc- 
tions as I should very soon “be 'axed* by the Fiihrer My reply 
took the form of a circular order to all my staff in which I forbade 
them to have any official dealings with Herr Keppler, and instruc- 
tions to the porters that Herr Keppler was no longer to be admitted. 
Since Herr Keppler was Hitler’s personal adviser on economic 
questions, and his office adjoined that of the Fiihrer, this step was 
not without its dangers. Years afterwards, Keppler succeeded in 
doing me a dirty turn in the matter of the Austrian schillings. 

Then I had to cope with a bit of general unpleasantness on the 
part of Herr Frick, the Minister of the Interior. He sent over an 
order one day according to which no employee who had been a 
Freemason was to be promoted or appointed to any position of 
trust. My reply, as always, was brief and to the point. I informed 
Herr Frick that I was not in a position to apply this order to my 
subordinate staff so long as a Freemason was head of the Reichs- 
bank (I myself was a Freemason). My refusal created no reper- 
cussions. Henceforth, too, I graded and used all Freemasons on my 
staff according to their qualifications and character. 

Once again, on another occasion, I informed the Minister of the 
Interior of my fundamental attitude to the subject of my staff, for 
I was constantly having to note how persistently the Party cliiefs 
tried to extend their mischievous influence to its activities. I wrote 
Frick: 

“The position of an employee is untenable in a State where, on 
principle, no employee can get an3rwhere against the will of the 
Party authorities. It is dangerous for the State to appoint persons 
with no special qualifications to official posts and duties, solely on 
the ground of their Party membership. Such action tends to bring 
into official employment persons who, for lack of knowledge and 
capacity, are unable to investsuch employment with any authority.” 

The signature which the President of the Reich affixed to the 
document appointing me to the office of Federal Minister for 
Economic Affairs was Hindenburg’s last official one. It still dis- 
plays the thick heavy strokes, but the second half is very shaky. 
On the and August, the President departed this life. On the ist 
August, Hitler had already compelled his Cabinet to pass a 
resolution combining in his own person the offices of Federal 
Chancellor and President of the Reich, a resolution which was con- 
firmed by public election on the 19th August. According to the 
American prosecutor in Niirnberg, that day saw the real beginning 
of absolute despotism. 



CHAPTER FORTY-THREE 

The New Plan 

M y two offices kept me well and truly occupied. I began 
the morning at the Reichsbank and changed over to the 
Ministry, in the Unter den Linden, about midday. My 
secretary, Friiulein StefFeck, came with me. During my three 
years’ absence from the Reichsbank she had held a job in the 
statistical department and had waited for me to come back. Her 
fellow-workers had sometimes chaffed her a bit, but she had taken 
it in good part. 

Her nickname “S.S.” often upset her in those days, as it 
recalled Himmler’s Schvtsstaffeln. But it had originated in some- 
thing quite different. When she had accompanied me to a confer- 
ence in London in 1934, a society paper had commented on the 
important part played by the women secretaries of the German 
delegation, the “smiling slaves” as they described them, who dis- 
charged their arduous duties with unfailing pleasantness. The 
initids had caught my fancy and the nickname had stuck to her. 

Like myself she took a decisive and somewhat frank stand against 
all Party encroachments. One day, when I was again in London, a 
Party pundit rang through, obviously anxious to go to London, 
and demanding forthwith a sum in English pounds. 

“What for?” enquired Fraulein Steffeck. 

“We have to fly to London with a very important communica- 
tion for Dr. Schacht.” 

“A telegram to London costs five marks. You can pay that at a 
German post office in German money.” 

“The information is much too confidential to be telegraphed.” 
“Then use a code,” said Steffeck imperturbably. “Send it in 
cypher to the German Embassy. That’s even quicker and cheaper 
than a plane,” 

The “brass hat” tried again several times. But S.S. was not to 
be persuaded. 

In my activities as Minister of Economic Affairs, Hitler accorded 
me the same freedom and independence that I already enjoyed as 
President of the Reichsbank. He understood nothing whatever 
about economics. So long as I maintained the balance of trade and 
kept him supplied with foreign exchange, he didn’t bother as to 



338 My First Seventy-Six Years 

how I managed it. Until the autumn of 1936, Hitler tolerated no 
measures that interfered with my activities. Then, however, we 
had the so-called “Second Four-Year Plan”, which very soon led 
to my departure from the Ministry of Economic Affairs. 

A large proportion of my foreign exchange was utilized by the 
Minister of Agriculture, Darre, a decent-minded fellow but more of 
a philosopher than a practical administrator. Many of his ideas — 
such as the hereditary farm-holding, the control of markets, the 
cancelling of farm debts, the stability of prices, the fight against 
waste, and so on — ^were sensible and successful. What Darre 
could not do was to meet the demand for foodstuffs from home 
production. Germany was too small and insufficiently equipped by 
nature for such a task. A considerable part of our food requirements 
had perforce to be met by imports from abroad, for which I had to 
furnish the foreign exchange. There was a good deal of wordy 
warfare carried on by correspondence ; on one occasion when turn- 
ing down his request for foreign exchange I ended with the words: 
“I can’t conjure money out of a hat!” 

The world economic crisis had seriously reduced German 
exports. Every country, both overseas and in Europe, was trying 
to cut down imports, whether by increasing tariffs, limiting quotas, 
or import bans. The fact that Germany was in arrears with her 
payments of interest on foreign loans induced certain individual 
countries to requisition their own payments on imported German 
goods, although the matter concerned not national but purely 
private monies. This too contributed to the continuous reduction 
in Germany’s foreign exchange receipts. 

I had as soon as possible to find some outlet in foreign trade 
which would ensure that Germany would receive raw materials 
and foodstuffs sufficient to meet her requirements. On the 24th 
September 1934, my foreign trade programme came into force 
and was thenceforth known as the “New Plan”. This New Plan 
represented a centralization of trade whereby imports were 
compulsorily regulated according to the means of pa3rment avail- 
able. Twenty-five supervisory centres were set up, entrusted with 
the control of all turnover in foreign trade. Foreign exchange 
bills payable in cash or for settlement account were allocated for 
sanctioned import transactions. 

Unfortunately, this Plan involved the creation of an extensive 
control machinery and a whole lot of officials, for which I expressed 
my deep regret when it was made known but which I described 
as unavoidable. I expressed the hope that it might soon be possible 
to restore normal trading conditions. Trade agreements were 
concluded with several foreign countries, in the course of which 



The Nev; Plan 


3=9 

German purchases in the countries concerned were credited for 
offset account, and these countries were urged to utilize these 
credits for purchases in the German markets. This system was 
developed especially in the Balkan and South American countries. 
In the spring of 1938, such offset account agreements operated 
in no fewer than twenty-five countries, so that more than half 
Germany’s foreign trade was carried on through these channels. 
By means of this bilateral trading system, Germany was able to 
satisfy her requirements for raw materials and foodstuffs. 

This policy laid me open to vigorous attacks from abroad. It 
certainly was in direct contradiction to previous conceptions of 
multilateral trading and to the most-favoured-nation treatment. 
Scientists in every country stigmatized this system as a repudia- 
tion of every well-known economic theory. What mattered to me, 
however, was not the classical tradition of my economic theory 
but that the German people should be provided with the neces- 
sities of life, Today, when the whole world thinks and acts in 
terms of bilateral treaties, the reader will scarcely be able to imagine 
the turmoil created by Germany’s trade policy in the ’thirties. 

By destroying the conception of private ownership, by levying 
a war tribute which was economically intolerable, by discriminat- 
ing against Germany’s political economy in countless ways all over 
the world, by denying to German business-men freedom to travel 
and live abroad, the dictated peace had shattered the very founda- 
tions on which traditional economic doctrine had been built 
up. I experienced great satisfaction when, at the opening of the 
Economic Conference of the British Commonwealth on the 4th 
October 1946 — a few days after my acquittal at Niimberg — Sir 
Stafford Cripps, President of the British Board of Trade, declared : 

“Schacht -^1 take no part in any of the discussions arising at 
this Conference. But Schacht’s spirit will be present with us all. 
The question arises whether world trade, and particularly that of 
Great Britain, can be increased to the necessary extent without 
putting some of Schacht’s ideas into practice,” 

In 1936, National-Socialist Germany was at the height of her 
international prestige. All limitations imposed by Versailles had 
been done away with. In spite of all difficulties, she now had a 
balanced economy. The Olympic Games, which were held that 
year in Berlin, attracted an immense number of foreign visitors 
and were the occasion of an uninterrupted sequence of brilliant 
festivities, arranged not only with unusual splendour but with 
excellent taste and consummate organization. One had to hand it to 
Dr. Goebbels that in this instance he knew his job. No matter 
whether it was a question of big events in the actual stadiums. 



330 My First Seventy-Six Years 

whether those taking part were invited to attend a theatrical 
performance, or whether plans had been made for excursions or 
sightseeing, everything bore the stamp of unusual though never 
obtrusive brilliance. Besides the sporting events, the high-light of 
the whole affair was the open-air evening fete on Peacock Island, 
situated in the river Havel between Wannsee and Potsdam. The 
Island was linked with the river bank by a bridge of boats. As the 
guests stepped on to the bridge they were greeted on either side 
by girls dressed as pages, all in white and wearing knee-breeches. 
The great park belonging to the Island Castle was illuminated, 
and countless little tables had been set up with room for more than 
a thousand guests served by white-clad pages. Specially selected 
music and a truly fantastic firework display constituted the enter- 
tainment. By way of a memento, each guest received an artistic 
gift from the Berlin Porcelain Factory. 

Hitler’s public appearances during these days were likewise 
exemplary. What speeches he made were moderate, pacific and 
friendly towards other nations. He even went so far as to shake 
hands with, and congratulate, Jesse Owens, a negro, holder of the 
hundred yards record. 

The New Plan worked satisfactorily not only for Germany; 
all those countries with whom bilateral agreements had been con- 
cluded experienced business revivals, inasmuch as they found in 
Germany an increased market for their goods. This was especially 
the case with farm produce and raw materials from the Balkans, 
which led to improved conditions in those countries. 

In 1936, in order to consolidate the reciprocal trade position, 
I made a trip to the Balkans, taking with me some of my colleagues 
from the Reichsbank and the Ministry for Economic Affairs. In a 
sturdy Ju.5a we flew to Belgrade, Athens, Sofia and Budapest. 
I stayed a few days in each of these four towns for discussions with 
Government and business circles. 

The thing that impressed me most during this trip was the far- 
reaching cultural influence on the Balkans of German character and 
customs. Just as in 1930 I had seen how, in Roumania, all the 
educated classes understood German, so in Jugoslavia the Croat 
section of the population continued to manifest its old tendency to 
turn to Vienna in all matters of language, art, literature and science. 
German was spoken at breakfast by &e Regent, Prince Paul, and 
his wife, Olga of Greece ; Frau Stojadinovitch, too, had a German 
mother. It is true that Princess Olga said she spoke German badly, 
but she made scarcely a single slip throughout the entire conversa- 
tion. In Athens, the King— who was of Danish extraction — spoke 



The New Plan 


331 

fluent German. His Prime Minister, M. Metaxas, had been an 
Officer on the Prussian General Staff, to which the superbly 
constructed Metaxas Line was to bear witness a few years later. 
Tsar Boris of Bulgaria was a member of the House of Coburg. 
All the senior officials and big business-men in Bulgaria spoke 
German ; and it is well known that in Hungary the educated classes 
were bilingual. 

In Belgrade, the German Ambassador, von Heeren, invited 
the Minister and principal business representatives to an evening 
reception at which I explained the new German trade policy. I 
stressed the fact that it was not Germany’s purpose to tie countries 
such as Jugoslavia permanently down to the level of an agrarian 
State. It would be quite wrong for the industrial States to set 
themselves against the gradual industrialization of the agrarian 
countries. The need of the agrarian States to develop on industrial 
lines was entirely natural and entirely comprehensible. Of course 
they would have to make a start with the technically simpler 
industries such as iron foundries and tin works — ^not with auto- 
mobile and watch and clock factories. Such development would not 
be detrimental to the industrial States — only the nature of the 
agrarian exports would gradually change. The higher the standard 
of living in the agrarian States owing to industrial development, the 
greater and more important would be their requirements; and 
ffieir increased purchasing power would benefit the industrial 
countries. 

It gave me real pleasure to see the enthusiasm with which this 
speech was received by the audience, which included M. Stojadino- 
vitch, the Prime Minister. 

In the late autumn of that year I undertook a second trip, this 
time to Ankara and Teheran. This second journey, similar in 
essence to the previous one, turned out to be a particularly 
interesting experience, for it took me to two countries which were 
finding their way to democracy via dictatorship. 

Kemal Atatiirk, the head of the State, was unable to see me 
immediately on my arrival in Ankara as he was in bed with 
influenza. The two following days were taken up with economic 
discussions and social events. On the second evening, the Ministry 
of Foreign Affairs gave a dinner at which ladies were present. 
The Prime Minister, M. Inonii, came for an hour or two, and there 
was much eating, drinking and conversation. Dinner over, a 
Vieimese ladies' orchestra played dance music. It was already late 
when the talk turned to the subject of national dances, and a high 
official of the Turkish Government took the floor in the centre of 
the hall and gave us a solo performance of those (to us) strange 



332 My First Seventy- Six Years 

Eastern dances which consist solely of a succession of rhythmic 
poses. They told me that this was one of the Turkish national 
dances and asked me for one from Germany. I instanced the waltz, 
but they would have none of it, for the waltz had long since become 
international. On the spur of the moment I asked the orchestra to 
play a Tyrolienne, and with one of the German ladies as my 
partner, I gave them a few turns of this Tyrolese dance which was 
accepted as a German example amid great enthusiasm. The lady 
was Frau Jenke, a sister of von Ribbentrop, the Foreign Minister, 
and wife of Krupp’s representative. 

On the third and last day of our visit, the President received me 
at his Palace in spite of his influenza, of which he still showed dis- 
tinct traces. I was rather uneasy about this visit for a very mundane 
reason. I had been told that Atatiirk was very addicted to strong 
drink, and liked to offer it to his guests. Since my student days, 
however, I had aU but given up alcoholic liquor. I hardly ever 
drink and avoid strong drink whenever possible, for I find it 
difficult to keep a clear head when taking liquor and it was essen- 
tial that I should do so on this occasion. So I was glad when coffee 
and cakes were handed round to start with. This, however, was 
followed by a somewhat milky-looking liquid in rather large 
glasses, in appearance exactly like the well-known arrack. 

There are times when the sudden materialization of something 
one dislikes and fears has a curious effect. Anyhow I was irritated 
but determined to hold my own. Summoning my courage I seized 
the glass, tasted and drank — a delicious lemonade, for which I 
obviously had to thank my host’s influenza. My inner equilibrium 
was restored. 

The interview was a lengthy one. Atatfirk spoke in Turkish, so 
Riishdi- Arras, the Foreign Minister, translated into French. The 
President added mutual recollections from the First World War; 
he criticized Ludendorff sharply and condemned the policy of the 
Young Turks during those years. He ended, however, by saying 
that I must not think he recalled the Turko-German companion- 
ship in arms with anything but satisfaction. Then the talk turned 
to the economic problems confronting Germany and Turkey, 
during which I gained the impression that here was a dictator 
who fully recognized his limitations and refused to entertain any 
impractical or utopian proposals. Instead of pursuing the idea of a 
Khalifat, he had concentrated all his efforts on the solution of the 
minor but purely Ttukish problem, and had achieved it. 

An hour and a quarter had passed before Ataturk dismissed me, 
Scarcely had I arrived back at the German Embassy when a call 
came through from the President asking me to remain there for a 



The New Plan 


333 

few moments as a messenger was on the way. A quarter of an hour 
later I received a silver-framed photograph of Ataturk with an 
inscription. Since Turkey awards no orders, a foreign diplomat 
who chanced to be present declared: “Ca vaut phis qu'un cordon" 
(that’s worth more than an order). 

Next morning my pilot, von Gdssel, flew us to Adana through 
the narrow gorges of the Taurus. In 1910, three of us had climbed 
northwards to the Taurus via Mersina. At that time Hyder Pasha’s 
Anatolian Railway went only as far as Bulgurlu on the northern 
edge of the Taurus. 

After an intermediate landing at Aleppo, we continued non-stop 
via Palmyra to Baghdad, and on to Teheran. On the return flight 
I stayed two days in Baghdad and had the greatest difiiculty in 
keeping out of political discussions on the subject of the country’s 
con^cts and disorders. But I could not get out of meeting some of 
the Ministers then in ofHce at a dinner given by our Ambassador, 
Grobba. On that very evening there was another attempt at a 
Putsch, during which the War Ministry was set on fire. But there 
were no further political repercussions. The incident made me all 
the more determined to curtail my stay in Baghdad as much as 
possible and abstain from all visits. 

The Shah of Persia was not in Teheran at the time, but was 
making a tour of inspection in the North. As he had expressed a 
wish to see me, we drove to Resht with an escort of five cars. The 
road was hard but several inches deep in dust, so that I was glad 
to be sitting in the front car with the German Ambassador, the 
Foreign Minister and the Minister of Finance. Through dust and 
heat, which at this time of year was still considerable, we drove at 
sixty miles an hour. The mountain road leading to Resht grew 
worse, and finally the long-expected puncture occurred. Our 
baggage car had broken down. 

We arrived at Resht in the afternoon. We wanted to wait for 
our luggage in order to change for the audience, but were requested 
to come at once, just as we were. 

Reza Shah had ruled Persia since 1925. His family belonged 
to the lesser nobility, and he himself had been a colonel in the 
Russian Army when he deposed the last member of the Qajar 
Dynasty and seized the throne. He tried to infuse the Fascist 
spirit into the Persian people and to found organizations for that 
purpose. We were treated to examples of these in the shape of 
parades of lads and girls in uniform. 

Reza Shah must have achieved and maintained power by means 
of extreme ruthlessness, for his ministers betrayed an almost 
physical terror before the audience. A few months after my visit, 



334 My Seventy-Sis Years 

the Minister of Finance, with whom I had become particularly 
friendly, fell into disfavour and, as a result, took his own life. 

The Foreign Minister reminded our Ambassador: “You know, 
of course, and I hope Herr Schacht knows too — one bow outside 
the door, one in the doorway and one inside the door.” 

Our Ambassador reassured him: “Don’t worry — ^this isn’t the 
first potentate to whom Herr Schacht has paid a visit.” 

The Shah came forward to meet me with outstretched hand and 
left me no time for bows. Within a very few minutes we had found 
a point of contact. The conversation proceeded in French, trans- 
lated by the Foreign Minister, and turned chiefly on the economic 
situation of the country. The eighteen-year-old Crown Prince, 
just returned from boarding-school in Switzerland, was present 
at the interview; but in reply to my question — ^in German — as to 
whether he had learnt German there, he achieved only a distinct 
“No”. As I took my leave the Shah raised his hand in the Fascist 
salute. Once again the three bows — ^inside the room, in the doorway 
and outside the door — ^never came off. 

Late that same afternoon we drove eastwards along the Caspian 
Sea to an hotel at Ramshar belonging to the Shah and managed in 
masterly fashion by a Swiss. The Shah’s idea was to create a 
fashionable spa and watering-place which should be the centre of a 
Caspian Riviera. And indeed there already existed possibilities for 
such a centre which should be to the whole of the Middle East 
what Nice is to the French Riviera. Climate and scenery have a 
beauty all their own. Systematic and vigorous steps, however, 
would have to be taken to counteract the plague of mosquitoes, and 
I had already, in response to his request, given the Shah some 
important hints on this point. 

For the present, the Second World War has put an end to these 
plans for a Middle East Riviera. Our morning baths in the Caspian 
Sea provided us with a foretaste of what might be achieved. 

At that time, however, the eighteen-year-old Crown Prince, 
who had replied in the negative to my enquiry as to his knowledge 
of German, did not know that, as his father’s successor on the 
Peacock Throne, he would marry a Persian Princess who had 
spent her childhood in Berlin and was the daughter of a German 
mother. When I visited Teheran in 1952, I was able to ascertain 
that the Queen spoke German as fluently as my wife and myself. 



CHAPTER FORTY-FOUR 


Mainly About Pictures 

I N matters of art, Hitler laid claim to infallible judgment which 
may have been traceable to his original intention of becoming 
either a painter or an architect. On one occasion only — and that 
was in Fritz Thyssen’s house — I sa%v a little oil painting by Hitler 
which betrayed a very limited ability and also revealed mistakes in 
drawing. He was firmly opposed to so-called abstract painting and 
similar experiments, and one can’t blame him for that. Since he 
entrusted Herr Goebbels with the weeding out of pictures in the 
“degenerate art” it is no longer possible to ascertain if the con- 
demnation of many good paintings produced by the “degenerate” 
artists orginated with him or with Goebbels. 

Hitler’s taste inclined more to the subject of the picture than to 
sound craftsmanship. He took a lasting interest in the House of 
German Art in Munich, which he had built to replace the Glass 
Palace, destroyed by fire. My present wife, who for five years was 
First Assistant at the House of German Art, was more frequently 
able to discern signs of this interest than was possible for his 
expert ministers. 

Hitler’s artistic judgment was not always reliable. He showed his 
lack of knowledge on many occasions when he caused pictures to 
be bought. When bidding at auctions he would often give instruc- 
tions to several agents in the neighbourhood at the same time, 
neither knowing anything about the other. As a result these bidders 
would frequently force up the prices. One well-known painting 
by Defregge put up for auction with an estimated value of some 
six thousand reichsmarks was forced up to a figure of ninety- 
five thousand in this way. 

Once, when I was staying at Karinhall, Hermann Goering’s 
private residence, I was struck by a three-quarter length portrait 
of a young lady by Makart. Karinhall, both in style and material, 
was exactly as one might imagine an ancient German log-hut. The 
walls were of thick planks covered with heavy beams, mu(^ of 
which had been brought from fer-distant forests; add to this an 
enormous hearth and afire fed with great logs and it is easy to under- 
stand why, in these surroundings, I was particularly impressed 



336 My First Seventy-Six Years 

by a picture executed with all the elegance and decorativeness of 
the eighteen-seventies — a style which has come to be recognized 
in the history of art as the “Makart manner”. 

But I was struck also by something else, for I thought I knew 
who was the original of the portrait. 

“That’s a wonderful new picture,” I said to Goering. “I don’t 
remember having seen it here before.” 

“I’m very proud of that picture,” Goering replied. “The 
Fuhrer recently presented me with it as a mark of his apprecia- 
tion.” 

“I have the impression, Herr Goering, that it doesn’t quite 
tone with these ancient German surroundings.” 

“Maybe not, but as it’s a present from the Fuhrer I have to let 
it hang there.” 

“I believe I have seen the picture before — I take it, it is the 
portrait of a Jewish lady well Imown in Vienna society.” 

Now indeed Goering did betray a certain embarrassment but 
managed to evade the question with a few non-committal remarks. 
I let the subject drop. 

Hitler’s scant knowledge of the history of art was clearly demon- 
strated on another occasion, this time with reference to a picture 
which he sent me by the hand of his adjutant. Captain Wiedemann, 
on my sixtieth birthday. 

Captain Wiedemann was among the many bearers of good wishes 
who enlivened the atmosphere of my private rooms in the Reichs- 
bank that day. He presented me with the picture, which had been 
carried in by an orderly. It was framed in gold and fastened to the 
frame was a small plate with Hitler’s signature by way of greeting. 
The gift was a painting by Spitzweg entitled “Only Thoughts are 
Duty-Free” {Nur Gedanken sitid zollfrei) featuring a stage-coach 
drawn up at a frontier customs-house, with passengers and customs 
officials bustling around. 

Scarcely had I taken one look at the picture, gleaming and 
smooth under the varnish, than I said to my wife : 

“That painting is quite definitely not genuine.” 

I knew, from having seen a good many examples of Spitzweg’s 
work, that in the course of years tiny cracks, no larger than a hair, 
appeared on the canvas. Hitler’s gtft showed none of these tiny 
cracks — ^it was smooth as satin. 

There followed a brief conversation with Wiedemann. 

“Will you please convey to the Chancellor my very sincere 
thanks for this valuable gift. I see that it represents a very well- 
known picture by Spitzweg. I should be most grateful if you 
could give me some information as to its origin. It is always of 



Mainly about Pictures 33^ 

special interest to a collector to know something of the history of 
his pictures.” 

“Unfortunately I can’t give you any information about it. All I 
know is that Herr Heinrich Hoffmann obtained the picture for 
the Fiihrer. The Fiihrer takes particular pleasure in making you 
this gift.” 

Heinrich Hoffmann was, as I well knew, Hitler’s personal 
and official photographer. My reply to Wiedemann was equally 
courteous : 

“Thank you again. For my own part I shall try to find out what 
I can about the history of the picture.” 

The first thing I did was to have it confirmed by connoisseurs 
that the picture was undoubtedly a forgery. Then Herr Zinckgraf, 
a distinguished art dealer in Munich, helped me to trace the owner 
of the original. He was an officer in the Luftwaffe, married to the 
granddaughter of the man who had acquired the painting in the 
first instance, and he and his wife lived at Regensburg. I went to 
see him and established various surprising facts. To begin with, 
it could be indisputably proved that the grandparents had acquired 
the picture direct from the artist. The original, which I now beheld, 
was painted on canvas, the forgery was on wood. Later I was able 
to obtain incontestable proof that the wood in question was an 
exotic variety which had never been imported into Germany prior 
to 1900, whereas the picture dated from the eighteen-seventies. 
Then too, the dimensions of the forgery were entirely different 
from those of the original. 

In our opinion, however, the most curious feature was that the 
colours in the original painting were in no way similar to the 
colours in the forgery. Then, widx the aid of my adviser in Munich, 
we were able to ascertain that many years previously the firm of 
Hanfstaengl had published art prints of Spitzweg’s pictures, includ- 
ing the one in my possession. But they had not been able to trace 
the original of my picture and had depended on a black-and- 
white reproduction, which the artist entrusted with the work had 
deliberately coloured unbeknown to the publishers. When Hanf- 
staengls learned of it they immediately withdrew the reproduc- 
tion from circulation. A specimen print with the incorrect colours 
must, however, have been preserved somewhere or other, for my 
forgery had been executed from it. 

So there we were, dealing with the forgery of a forgery. The 
remarkable feature of the whole thing was that it led one to not 
very flattering conclusions as to the knowledge of art displayed by 
Adolf Hitler and his adviser and agent, Hoffmann. From conversa- 
tions with my assistant it transpired that a whole lot of similar 



338 My First Seventy-Six Years 

Spitzweg forgeries had been put on the market, until finall y a 
South German Government solicitor had had the courage to 
protest. 

In the meantime I had not been able to resist telling Hitler that 
his present was a forgery. Hitler was considerably upset and made 
me return the picture, but I received the frame bade with Hitler’s 
signature. After a few months Hitler informed me that the picture 
was, after all, genuine : he had obtained a written expert opinion to 
that effect. I asked him to send me the certificate but I never 
received it. 

The whole affair would probably have died a natural death 
if the forgery case had not been launched, in which no fewer 
than forty-three Spitzweg forgeries were involved, including my 
picture. The trial revealed that a little copyist had executed the 
pictures in all good faith to the order of some profiteer, and that 
two Munich painters had added a forgery of Spitzweg’s signature. 
It also transpired during the proceedings that the certificate 
mentioned by Hitler was the work of one of the two forgers and 
had been obtained from him by Herr Hoffmann. 

Herr Hoffmann informed me in a letter that Hitler intended to 
send me another picture to replace the first one. I never received 
it. Funnily enough, Herr Hoffmann added that he had made 
nothing on the deal. As a matter of fact I never supposed he had. 
I stuck his letter in Hitler’s gold frame and himg it in my room 
instead of the Spitzweg. 

Yet another still funnier picture story. When Field-Marshal von 
Blomberg celebrated his fortieth year in the Army I read in the 
paper that the National- Socialist Party had presented him with an 
oil portrait of Blficher to mark the occasion. 

A few days later some Freemason friends sent me three photo- 
graphs. An accompanying letter contained the information that 
the presentation work was a contemporary copy of a Blficher 
portrait, the original of which had been in the possession of the 
“Three Rafters” Lodge at Munster, Westphalia. 

In this picture “Marshal Vorwarts” was represented as Master 
of the Munster Lodge. Behind an altar-table, on which was an 
open Bible surmoimted by a sword, stood the figure of Blficher 
in full Masonic regalia, apron round the waist, blue ribbon with 
carpenter’s rule around neck and chest, hand outstretched, 
grasping the Master’s hammer, the hammer itself resting on the 
table; next to it the circle and other Masonic emblems. 

The antique dealer who had obtained this copy had probably 
realized that, in its present guise and under present conditions, 
rile picture was unsaleable. So he had simply had the Masonic 



Mainly about Pictures 

accessories painted out. Apron, ribbon, hammer, had disappeared. 
The one disturbing feature was that the worthy Bliicher now 
pointed his finger downwards at the empty air, for which there 
seemed no real justification. 

While the first photograph showed the picture in its original 
form, the second reproduced it in the condition described above. 
But oh dear ! there was the drcle still on the table, which might 
look suspicious. The Bible need not be interfered with — it might 
be taken for any other book ; and the sword resting across it actually 
gave the picture a desired military touch. But the circle must come 
out ! So that too was painted over and now — as the third photo- 
graph showed — ^the painting was void of offence, and saleable. 

I thought it would amuse Blomberg to see how his picture had 
been transmogrified, so I sent him the whole story including the 
photos. But Blomberg obviously took it dead seriously. He handed 
the lot over to Rudolf Hess, the Fiihrer’s deputy, who had made 
the presentation. The reply was a two-page letter from Hess to 
Blomberg, as follows : 

My dear Field-Marshal,* 

Your letter of the ayth ultimo was handed to me today regarding 
the big portrait of Bliicher which the Movement presented to you 
on the occasion of your forty years’ military service. 

The fact that this picture was originally in the possession of 
Freemasons, and the original Masonic insignia have been painted 
over, is as great a surprise to me as it is to you. In view of the signi- 
ficance attaching to the presentation of this picture from the 
Freemasons’ point of view, I would state briefly how it came into 
my hands. 

During the days preceding your Jubilee I sought in vain for a 
gift whi^ would have some connection with the Wehrmacht and 
at the same time give you pleasure as a work of art. Eventually 
some friends drew my attention to a Berlin art dealer who had some 
originals by Menzel for sale. On the morning of your Jubilee, 
however, the art dealer showed me, instead of these, a photographic 
reproduction of the Blucher portrait, which was privately owned; 
and the sale was completed. The picture was so exactly what we 
had been looking for that I immediately sent for it and, after a 
brief inspection, bought it. My attention was not drawn to the fact 
that it had been in the possession of Freemasons, nor that anjrthing 
had been painted over. 

In these circumstances it is obvious that the gift cannot be said 
to have any symbolic connection with the attitude of the Wehr- 
macht or the Party towards Freemasonry, 

• The nearest English equivalent to the original Sehr verehrter tmd 
lieber Herr Genercdfeldmarschedl. 



34 ° 


My First Seventy-Six Years 

The fact that Blucher was a Freemason is equally without 
significance, since at that time, so far as we know, Freemasonry 
pursued no objectives that might be dangerous to our nation, nor 
in all probablity had it become involved in international alli ances 
to the extent that prevails today. Nevertheless, if this should have 
been the case, then many of the high-ranking persons who at that 
time were members of Lodges must have been ignorant of it; 
otherwise it is unthinkable that such patriots as BlUchcr, and even 
Frederick the Great and many others, could have been members of 
Lodges. 

I must confess that it gives me even greater pleasure than it did 
hitherto to know that the portrait of the great Prussian military 
leader is no longer in the hands of Freemasons, but with the 
Wehrmacht where it belongs. And I am especially delighted that 
the N.S.D.A.P. was the means — ^albeit unconsciously — of removing 
it from the possession of one who was obviously putting it to wrong- 
ful use, and transfer-ring it to its most worthy owner. 

There is, however, another side to the question — namely, how 
did the N.S.D.A.P. come to pay a price for this picture com- 
mensurate with the value of an old, historical work, whereas it 
should have been taken from its original owner — the Lodge— 
without compensation. I have ordered an enquiry into the matter. 
It is possible that when the Lodge was dissolved those concerned 
sold the contents for the benefit of public objects. Should anyone 
have made a profit on such a deal, I shall see to it that he is punished 
and that the purchase price is handed over to the Winter Distress 
Fund. 

I should be grateful if you would ensure that these statements of 
mine are made known to all those who have written or will be 
writing to you on this subject — ^particularly former Freemasons. 
Th^ing you for your greeting, which I cordially reciprocate, 

Heil Hitler! 

Yours as ever, 

(Signed) R. HESS. 

But even Rudolf Hess could not do away vrith the fact that 
Bliicher, the hero of Prussian history and the most determined 
opponent of Napoleon’s dictatorship, should have been a “damned 
Freemason’’. 

Whether Hitler knew more about music than he did about the 
other arts I never discovered, as I myself am not musically well- 
informed. I have never known Hitler to be a Bach or Beethoven 
“fan”, whereas I should say that he had probably heard Wagner’s 
Meisterar^er a hundred times. During a dinner, at which I sat 
next to Funk, the Minister for Economic Affairs, the orchestra 
played a melody by Franz Leh^r. Funk remarked: 

“The Fiihrer is particularly fond of Lehdr’s music.” 



Mainly about Pictures 341 

Coming as it did from Funk who was himself extraordinarily 
musical, Ais remark did not seem to me to point to a very exalted 
taste in music on Hitler’s part. I took advantage of the occasion and 
said jokingly : 

“It’s a pity that Lehar is married to a Jewess.” To which Funk 
immediately replied : 

“That’s something the Fiihrer mustn’t know on any account.” 

“On the contrary, Herr Funk, you must tell the Fiihrer.” 

“No, no, it’s quite out of the question.” 

“But, Herr Funk, whatever happens you must tell the Fiihrer, 
otherwise he’ll develop an entirely wrong artistic taste.” 



CHAPTER FORTY-FIVE 


At Odds with the Party 

F rom the very beginning I was on bad terms with the Party. 
Prior to working with the Hitler Government I had met 
only very few Party members. I got to know most of the 
Gauleiter in the course of my official activities. I studiously avoided 
social gatherings of the Party and attended official assemblies only 
when unable to get out of doing so. When I occasionally came 
across an honest, decent character among Party members I was 
glad to cultivate Hs acquaintance. Such characters were neither so 
rare nor so few as rumour later asserted. 

Unfortunately these responsible and industrious elements were 
much less conspicuous than the braggarts, bullies and profiteers 
whom I often irritated with my sarcastic remarks, though without 
getting much forrader; a larger percentage among them being 
quite unequal to the intellectual demands of their official positions. 

By way of illustration I remember a reception at the Kaiser 
Wilhelm Academy, with the usual dinner-party, at which I had to 
make a speech. I was glad of the opportunity to attack bureau- 
cracy, State control and collective planning, and on the other hand to 
emphasize the need for personal initiative, freedom of opinion and 
individual incentive. I ended with a well-known quotation from 
Goethe, which I adapted slightly to the occasion: 

Nation, Bondman, aye, and Victor, 

Each and all now testify. 

Highest good vouchsafed to mortals 
Lies in collectivity. 

“Oh, forgive me,” I added, “that was a slip — ^it should run: 

Nation, Bondman, aye, and Victor, 

Evermore do testify. 

Highest good vouchsafed to mortals 
Lies in personality.” 

As we left the hall I found myself near two men in brown uniform 
engaged in conversation. 

“That was a very good speech by that fellow Schacht.” 

“A pity, though, that he made that bad mistake at the end.” 



At Odds with the Party 3^3 

In Niirnberg one day my defending counsel received a letter 
from a Party member which illustrates — perhaps better than many 
examples — ^the hatred that accumulated against me within the 
Party. This woman wrote: 

“I had to attend an eight-day study course at EisenSrzt near 
Traunstein. On one occasion you were personally mentioned, 
and it was made clear to us why, though a non-member of the 
N.S.D.A.P., you had received the golden Party Emblem. We need 
the man — so we were told — and can’t do without him, since there 
is no one sufficiently well equipped to replace him. Schacht is an 
enemy of Hitler and of the Party and will never become a member 
of the Party; he is a Freemason and a scoundrel.” 

In the years that followed there was scarcely a Gauleiter or similar 
Party functionary with whom I did not come into conflict. 

Robert Ley, leader of the Deutsche Arbeitrfront (German 
Workers’ Front) would have dearly liked to compel the entre- 
preneurs to join the Arbeitsfront, having especial regard for their 
ability to pay. Herr Schmitt, my predecessor in the Ministry of 
Economic Affairs, had come to a preliminary agreement with Ley 
in connection with the ordering of employment; I extended the 
scope of this agreement so that the Arbeitsfront could only deal with 
organized business as a whole. Industry was organized by the 
National Chamber of Commerce which came under my juris- 
diction. That did not prevent Herr Ley from approaching the 
enir^reneur associations direct with all demands and enquiries. 
I soon put a stop to this procedure by means of a memo addressed 
to the National Chamber of Commerce and to the industrial 
organizations who were members of the same: 

"All communications from the Deutsche Arbeitsfront, in so far 
as they are not countersigned by me or by the head of the National 
Chamber of Conunerce, are to be filed xmanswered.” 

The Gauleiter of Stettin, Schwede-Coburg by name, was a 
former machine-locks m ith and sergeant-major of Marines. In his 
capacity of superintendent at the Coburg Electricty works he 
launched out into politics as one of the oldest members of the 
Party. He aimed at the conquest of the Stettin Chamber of Com- 
merce, which was directed by a merchant of that city whose 
conduct — ^notwithstanding his membership of the Party— was 
exemplary. All Gauleiter did their utmost to "get in” with those 
public or semi-public bodies offering possible openings or perquis- 
ites. So one fine day, on some pretext or other, Schwede-Coburg 
demanded the dismissal of Ae President of the Chamber of 
Commerce who came within my jurisdiction. Naturally I rejected 
this preposterous request. Whereupon the Gmlater instigated 



344 Seventy-Six Years 

a campaign against the President of the Chamber of Commerce 
forbidding all Party centres and (as Lord Lieutenant of Pomerania) 
all provincial authorities to have any dealings whatsoever with 
“Dr. Schacht’s pet”. 

I retorted by calling a meeting of the Chamber of Commerce 
at Stettin and gave notice that I intended to be present, which 
brought me a letter from Schwede-Coburg containing the following 
sentence : 

“I look upon your presence at the meeting as an affront to 
myself in my own county town, my rejection of the President of 
the Chamber of Commerce, and the fact that you support him^ 
being common knowledge.” 

I quote this sentence as typical of the overweening presumption 
and impudence of the Party mandarins. 

When, shortly before the meeting opened, the footman 
announced the arrival of the Gauldter (who entered in mufti) I 
replied: 

“You are mistaken; that is not the Gauleiter, it is the Lord 
Lieutenant.” The reason for this was that the Lord Lieutenant 
came under my jurisdiction in all matters pertaining to business 
and industry whereas I had no authority over the Gauleiter. At the 
meeting I came out very strongly in support of the President of the 
Chamber of Commerce, who retained his position until the day 
when I myself left the Ministry for Economic Affairs. 

After the meeting was over, the Gauleiter enquired if I wished 
him to attend the dinner which was to follow. I replied: “The 
Gauleiter can please himself. I don’t care a button when or where 
the Gauleiter dines or what he has for dinner.” 

In East Prussia I ordered the temporary suspension of the 
manager of a branch of the Konigsberg Chamber of Commerce 
who had sided with Gauleiter Koch and ignored the instructions 
of his President. The Gauleiter learnt of this and ordered the 
Kdnigsberg Post Office not to deliver the letter from the Minister 
of Economic Affairs to the branch manager. This incident gives a 
better picture than mere generalizations could do of the attitude 
adopted by Party functionaries towards the State. Luckily Herr 
Koch was too late: the letter had already been delivered. 

On one occasion, when I was due to hold a meeting of the 
Saarbriicken Chamber of Commerce, the chairman, Hermann 
Rochling, told me that Herr Biirkel, the Gauldter, would only 
consent to attend the banquet afterwards if it did not take place in 
the “Harmonie”, the club-house of the “bourgeois” set. I wired 
back that I wished the dinner to be held at the “Harmonie ” club — 
so Burkel stayed away. 



At Odds with the Party 2^^ 

My refusal to be daunted and my blunt speech were certainly 
effective against open interference and demands by Party officials, 
but I was not always able to counter the intrigues engineered 
behind my back. It is true that Hitler backed me up vis-a-vis his 
adherents, but always in such a way as to suggest that they must 
put up with me, never in a manner which insisted that they should 
co-operate. 

Robert Ley would dearly have liked to strengthen his influence 
over the young industrial workers, and did aU he could to bring 
the training of apprentices imder the control of the Arbeitsfiont. 
As the artisans’ unions came within my province I entered a 
decided veto. What concerned me was not that apprentices should 
absorb a “National-Socialist philosophy” but that they should 
develop into decent craftsmen and turn out really good work, I was 
continually reminded of a conversation I once had with a barber’s 
assistant : 

“Please, sir, can’t you do something to help me pass my master’s 
exam?” 

“That’s a queer thing to ask. Haven’t you learned your trade 
properly?” 

“Of course I’ve learnt it,” he said. “But I can’t remember the 
birthdays of Goebbels’ children I” 

In the spring of 1937 I took the opportunity of attending a 
ceremony of the Berlin Chamber of Handicrafts at which a large 
number of apprentices were to be given their discharge, i.e. 
promoted to assistants.* Thanks to successful scheming on the 
part of Dr. Ley, Hitler issued an order on the previous evening 
banning the event at which I was going to speak. Next morning 
I had to threaten Hitler with my resignation to ensure that the 
ceremony took place. News of Ley’s plot had spread abroad and 
the great hall was packed with thousands of people. 

I took advantage of my speech not only to emphasize that the 
education of the yoimg should proceed under the supervision of the 
Minister for Economic Affairs, but I also added some arguments 
against the “philosophy” with which the Party menaced our 
young people. Amongst other things I said: 

“No community, and above all no State, can prosper which is 
not founded on lawfulness, order and discipline. No order can exist 
where injustice rules. There is an old Latin proverb which says: 
Justitia fundamentum regmrum (Justice is the foundation of king- 
doms). The Bible expresses it in the words : ‘ Righteousness «calt- 
eth a nation.’ Righteousness, justice, is also the most implacable 

* Geselle — ^Journeyman. Assistant is the nearest English equivalent. 

12 



34^ Fifst Seventy-Six Years 

enemy of all class-differences. Therefore you must not only respect 
justice and law, but you must also stand out against injustice and 
lawlessness wherever you find them. Be upright and honest and do 
not be afraid of truth. Another wonderful line says : ‘ Strive for the 
truth unto death, and the Lord shall fight for thee ’ (Ecclesiasticus 
4. 28). That means, he who stands up for justice, decency and 
truth will feel himself imbued with divine strength.” 

I never missed a single chance of protecting all inside and out- 
side officials under my jurisdiction. If a president of a chamber of 
commerce, or a Syndiktis, were attacked by the Party he could rest 
assured that I should retain him in his post. If State banks and 
other financial institutions under my control were threatened by the 
Party it was a foregone conclusion that the Party would come off 
worst. I saw to it that numerous Freemasons either remained in 
employment or were appointed to various positions. The worst 
headache was the Jewish question, of which I shall have more to say. 

In a speech at the Stewards’ Dinner at Bremen on the 14th 
February 1936 I voiced some sarcastic remarks about the dismp- 
tive methods by which the Party sought to reshape the world. I 
bade them take comfort in the thought that a philosophy which 
fails to conquer the world in the space of three years may even yet 
be worth something, adding that one should not label every man 
a scoimdrel who, in the space of those three years, has not adopted 
this new philosophy. Having regard to Germany’s thousand years 
of past history, I spoke in praise of the power of tradition: 

“It gives me particular pleasure to see youth paying respect to 
age, as is happening at this banquet. I say this, not entirely without 
regard to the present day, when it sometimes appears as though 
the young were bringing up their elders, instead of the other way 
about.” 

The result of this speech was that Himmler, who was present, 
immediately issued an order banning its publication in the news- 
papers. To contradict me by word of mouth on the spur of the 
moment was something he did not dare attempt. 

Not all the hostility of the Party, however, could prevent me 
from continuing my efforts to lead Hitler in the way he should go. 
On the 3rd May 1935 , 1 took part in the trial trip of the Nord- 
deutscher Lloyd vessel Schamhorst, with Hitler and a whole 
crowd of ministers and others of his etitourage on board. Knowing 
that I should meet Hitler, I had prepared a brief memorandum 
on questions of special importance to me, and I handed it to him 
in person. 1 had, of course, worded the memorandum to suit his 
mentality. If I wanted to achieve results with him I had to start 
out as much as possible on his own level. 



At Odds with the Party 347 

Hitler read through my document and at once sent for me to 
explain that there was no need to take my complaints so tragically 
— everything would turn out all right as matters developed. 

This memorandum of the 3rd May 1935 closed with the follow- 
ing paragraphs : 

I. The Church. Officially the Third Reich takes its stand on 
Christianity, for which reason the Churches are financially sup- 
ported by the State. Further, one shoidd recognize the Govern- 
ment’s desire to unite the Churches of Germany as much as 
possible on national German lines. So far no legislative steps have 
been taken to achieve this end, but ^Reichsbischof (State Cishop) has 
been appointed who has recourse to measures outside the law which 
serve only to provoke resistance on the part of the leaders of the 
various religious denominations. Clergymen are arrested, treated 
like jail-birds, with consequent detriment both to their prestige 
and their health, and all without the slightest legal foundation. 
Over-zealous partisans are allowed to insult and injure members of 
the most varying denominations without the State according them 
the protection which it is in duty bound to extend. These conditions 
have aroused the strongest indignation, particularly in Anglo- 
Saxon and Scandinavian countries, and also, in so far as Catholic 
susceptibilities have been wounded, in the countries concerned; 
they have engendered a far-reaching resentment against Germany 
which in many cases has expressed itself in a refusal to have any 
business dealings with our country. 

z. The Jewish Question. Originally instituted as a result of the 
Aryan legislation, the Jewish world boycott of Germany had lost 
much of its effectiveness during the past months. Even if most 
foreign politicians repudiate anti-Semitism in principle, the Jews 
have never been and are not popular anywhere, and it has been 
increasingly appreciated and to a great extent tacitly recognized 
that a nation’s political and cultural destiny should not be entrusted 
to Jewish hands. What has revived and intensified the Jewish 
question is, once again, the unbridled antagonism vented upon 
individual Jews, not merely illegally but against the explicit 
Government decree which guarantees to the Jew the opportunity 
of engaging in business. The agonizing persecution of Jewish 
individuals under the direction or with the connivance of Party 
groups, and the failure of State machinery to take any effective 
counter-measures causes an ever-repeated tightening of the Jevirish 
boycott of German exports ; for each incident, even the smallest, 
is magnified and spread abroad, as Schopenhauer’s well-known 
phrase has it : if someone treads on the foot of a Jew in Frankfurt, 
the entire international Press from Moscow to San Francisco raises 
its voice in lamentation. 

3. The Gestapo. No serious politician would wish to do away 
with the work or the Gestapo as a defence against Communism and 



348 My Seventy-Six Years 

other forces hostile to the State. The Gestapo’s activities, however, 
extend far beyond this scope : numerous arrests, transfers to con- 
centration camps, etc., occur often without the person concerned 
even knowing why he has been arrested ; and often, unfortunately, 
where there is absolutely no question of guilt, but only of the 
merest suspicion. It is true that the Minister for Internal Affairs 
issues orders according to which such arrests are not allowed, but 
he only succeeds in exposing himself to ridicule, for the Gestapo 
pays no heed to such orders. Sevenhundred years ago Magna Charts 
guaranteed individual freedom to the English citizen, and three 
hundred years ago the Habeas Corpus Act decreed that no English 
citizen might be arrested without being informed of the charge 
against him and without the right of recourse to legal proceedings. 
Since then, the right to individual freedom and the claim to proper 
judicial hearing is reckoned the highest possession of civilized man. 
By contrast, the behaviour of the Gestapo earns us the contempt 
of the whole world, and this contempt can develop into active 
enmity if — as has already happened — ^the arm of the Gestapo is 
extended, in defiance of international law, against other countries. 

I don’t think anyone else in Hitler’s entourage ever pointed out 
to him so plainly die errors and blunders of his system. And this 
occurred as early as 1935, i.e. two years after his rise to power. 

His vague expressions of reassurance after going through my 
memorandum did not satisfy me. I went a step further, and at the 
opening of the Ostmesse — ^the Eastern Fair — ^at Konigsberg, East 
Prussia, on the i8th August 1935 , 1 made a speech which attracted 
the widest notice under the title of “The Konigsberg Speech”. 

I was fully alive to the fact that with the enmity of the Party 
I was exposed to the utmost personal danger. The American 
Ambassador, Mr. Dodd, has recorded in his memoirs that I 
entered his room one day with the words: “I’m still alive.” 

That same ambassador came to see me in December 1937, 
iimnediately prior to his departure for New York, and begged me, 
vdth aU the urgency at his command, to go with him to America. 
When I asked him, somewhat astonished, how he came by such a 
notion, he replied : 

“Dr. Schacht, I know for certain that the S.S. has orders to make 
away with you.” 

“Mr. Dodd,” I returned, “I am most grateful to you for your 
concern about me; but I can’t bring myself to emigrate. I shall do 
my best to protect myself against the S.S. If I don’t succeed — ^well 
— ^I shall die — ^that’s all.” 



CHAPTER FORTY-SIX 


The Konigsherg Speech 

M y first public criticism of the Party’s policy occurred at 
theopeningof theFairatKonigsberg. To all appearances 
the speech started innocently enough. The occasion 
was the so-called Ostmesse in Konigsberg at which several other 
neighbouring countries, notably from Eastern Europe, were re- 
presented. It was the custom to open this Fair with a speech by a 
member of the Ministry for Economic Affairs. This time I decided 
to go myself, but told no one what I intended to say, although 
every word of the speech had been most carefully prepared before- 
hand. Since nearly all my speeches were printed in the Reichs- 
bank’s own printing works, I already had a printed copy ready for 
Kdnigsberg. 

It was no surprise to me that the opening speech should be 
picked up and broadcast by Deutschlandsender. That was the rule 
at such events. No one expected anything sensational. 

I spoke clearly and distinctly, and had already begun to express 
disapproval of the Party’s attacks on Freemasons and Jews when 
Chief Group-Leader Bach-Zelewski and two companions in full 
uniform arose from their seats in the audience and clattered towards 
the exit. I glanced up and was just about to say; “Corridor, please, 
second door on the right,” when I remembered I was speaking 
into the microphone. So I held my peace while the gentlemen 
walked out, and finished my speech without any alteration. As I left 
the platform to return to my seat my neighbour, Gauleiter Erich 
Koch, remarked : 

“Brother, brother, you’ve a hard road aliead of you.” {Monch' 
lein, Mdnchlein, du gehst einen schtoeren Gang.) 

I shrugged my shoulders and consoled myself with the thought 
that with Martin Luther I was in good company. But at the same 
moment I realized that from now on I was identified as an open 
adversary of the Party. 

Immediately after the opening ceremony I dictated a letter to 
Himmler, national head of the S.S., protesting in the strongest 
possible terms against the behaviour of his Obergruppenfukrer in 
the presence of an officiating Minister of the Reich, and demanding 
that he be dismissed. Many weeks later I had the satisfaction of 



350 My First Seventy-Six Years 

knowing that Herr Bach-Zelewski, though not actually punished, 
had been transferred to Silesia. 

Goebbels now appeared on the scene, the contents of my 
speech having, of course, been promptly communicated to him. 
Its dissemination by radio was a fait accompli, but it was still 
possible to prevent its reproduction in the newspapers. My speech 
appeared in the Press, with all the offensive passages left out. 

I was in no mind to accept this mutilated version and had ten 
thousand copies printed by the Reichsbank and displayed on the 
counters of all our branches throughout the country. The demand 
was amazing. One edition after another had to be printed — each 
consisting of ten thousand copies — and found its way among 
the public, eventually reaching a total of two hundred and fifty 
thousand, 

Almost every foreign newspaper noticed the speech. The 
London Economist wrote: — ^“No one can doubt Dr, Schacht’s 
courage, . . . The arrows aimed at him by the Nazi Party leaders 
flew unpleasantly near their target. The Kfinigsberg speech last 
Sunday represented his flaming counter-attack on the Party,” 

And the Danish poet Kaj Munk wrote : 

‘“Give us a law for the Jewish element in our nation’ was 
Schacht’s cry in our time all over Germany, a direct challenge to 
Goebbels. Schacht or Goebbels, the choice lies between these two. 
Who and what Hitler is depends on this choice.” 

As everyone knows, von Papen’s Marburg speech had led directly 
to his temporary arrest during the Rohm Putsch of the 30th June 
1934, though he had notlung whatever to do with it. I wondered 
what personal consequences would be in store for me from my 
Konigaberg speech. I had attacked Party ideas and individuals. 
Would they take it lying down? 

With an eye to the economic policy represented by the VdIMsche 
Becisachter, the authoritative Party organ, I had slated its lack of 
appreciation of the difficulties of our feancial problems: 

“What financial and economic efforts are required for the 
performance of this task — that is something of which these unthink- 
ing amateurs have not the faintest conception. A big newspaper, 
for instance, mentions the new intention to give technical science 
priority over business, and according to which business is to be 
compelled to keep pace with the development of technical science, 
even to the extent of becoming breathless in the attempt. The 
author appears to assume that asthma is a particular incentive to 
increased production. What heart would not be thrilled on reading 
sentences such as : ‘ The flag is more than a bank account* or ‘ The 
nation,. not the national economy, is of primary importance,’ Such 



The Konigsberg Speech 351 

sentences are disarmingly correct, but what use are they to the 
economist in his practical work ? When I recently drew attention 
to the fact that German economy must be kept free of embarrass- 
ment I read that the question as to whether a measure was cal- 
culated to embarrass the national economy was a sign of Liberalism. 
My suggestion that to render our nation capable of self-defence 
presupposed the concentration of all — and I mean all — our econo- 
mic and financial efforts, was dismissed with the remark that 
nowadays only old grannies got the jitters and asked, who was 
going to pay for all that ? At the risk of being labelled an old granny 
I wish to state with all possible emphasis that the question of how 
materially to carry out the task entrusted to us causes me consider- 
able anxiety. To gloss over the gravity of Germany's task with a 
few cheap phrases is not merely senseless, it’s damned dangerous.” 

In another passage I attacked “people who go about by night 
heroically bedaubing windows ; who label every German who buys 
from a Jewish shop a traitor to his country, and every former 
Freemason a blackguard ; but who on the other hand, in the legi- 
timate fight against ‘politics-spouting’ pastors and chaplains, are 
unable to distinguish between religion and misuse of the pulpit.” 

In the realm of foreign politics also I uttered serious warnings to 
the Party chauvinists : 

“We would emphasize that self-respect demands respect for 
others, that to maintain one’s own manners and customs does not 
imply contempt for the manners and customs of others ; that to 
appreciate other people’s accomplishments only serves to enhance 
our own, and that the only way to victory in economic competition 
is by first-rate production, not by recourse to violence or cunning.” 

Curiously enough, there was no official Party reaction to my 
Konigsberg speech. No attempt was made to prevent the distri- 
bution of the two hundred and fifty thousand printed copies ; no 
refutatory articles were published anywhere. 

About a week after Kdnigsberg, I had to see Hitler on another 
matter. He studiously avoided any critical remark on my speech 
from which he quoted only one sentence: “Herr Schacht, you 
were quite right when you said at Kdnigsberg that we were ‘all 
in the same boat.’ ” 

This strengthened my conviction that I should continue my 
propaganda in favour of a moderate and decent policy, and I got 
Hitler to give me a chance of speaking about our financial and 
foreign-exchange situation to the highest Party officials at the forth- 
coming Party Convention. I hoped for some of the effect that I had 
achieved with several speeches in the presence of military visitors 
to the Military Academy, in which I had emphatically stated that 



3 53 My First Seventy-Six Years 

there was a natural limit to German armament imposed by the 
restricted economic possibilities to which Germany was subjected. 

On the 17th September 1935, according to my agreement with 
Hitler, I spoke on this subject at the Niirnberg Party Convention 
in the presence of all Gauleiter, Reichsleiter, and other top- 
ranking officials. I pointed out that financial assistance to the Reich 
by the Reichsbank must decrease and that further armaments must 
be financed out of taxes or loans. In the matter of raw materials 
I emphasized that eighty-three per cent of our foreign trade was 
achieved by means of barter, i.e. goods against goods, and that we 
received free foreign exchange for only seventeen per cent of our 
exports. This percentage I designated as totally inadequate. I 
pointed out that other countries had already provided us with 
goods in advance to the value of five hundred million marks which 
it remained for us to repay in manufactured exports. Finally I 
demonstrated once again the damage done to our export trade by 
Party excesses : 

“The resumption of violent methods in our cultural and racial 
conflict has caused widespread and definite deterioration of the 
atmosphere abroad during recent months. It is not merely a ques- 
tion of the Jews, who control a great part of the international trade 
in raw materials: it applies also to those who draw conclusions 
detrimental to the Government as a result of our differences with 
Protestants, Catholics, Jews and Freemasons.” 

And I ended with the words: 

“It is therefore of vital importance that the methods employed 
in the racial and cultural conflict shall be put on a legal basis and 
brought into harmony with political and economic requirements.” 

When I had finished Hitler asked me to leave him alone with 
his Party henchmen. What his comments were on the subject of 
my speech I am unable to say. At any rate I gathered, from one or 
two statements that were made to me, that he had issued strict 
orders to those present that they were not to attack me. Later I 
assumed that this injunction represented to him nothing more than 
a strategic, opportunist move. 

Still, I was glad to have had this chance of expressing my 
views direct to topmost Party oflScials. I had come to Niirnberg 
expressly for this purpose for one day only, and took no part in 
any of the other functions of the convention. 



CHAPTER FORTY-SEVEN 


The Jewish Question and the Church Question 

P RIOR to 1930 there was scarcely any sign of an anti- 
Semitic political movement in Germany. Inasmuch as it 
did exist to a very small extent, it could be attributed to 
economic motives among the lower middle class. In this plebeian 
anti-Semitism racial enmity was entirely unknown. Mixed mar- 
riages were frequent. In good middle-class society the Jew was a 
welcome guest. 

The fact that Hitler made use of anti-Semitism for propaganda 
purposes can be traced back to his Vienna period. In Germany he 
was helped by the fact that, at the time of the Weimar Republic, 
an unusually large number of eastern Jews from Poland, Roumania 
and Russia poured into Germany, consisting to a great extent of 
suspicious or even desperate elements. These eastern Jews contri- 
buted largely to the vitiating of business life. They took advantage 
of the disturbed political conditions, not only to profit by inflation, 
but to play a particularly active part in the corrupting of ofiicials 
who put them in the way of a good deal of black-market business. 
Nevertheless, anti-Semitism never became popular with the masses 
of the German people even in Hitler’s time. Every action launched 
by the Party against the Jews had perforce to be carried out by 
specially detailed Partymembers. The great mass of the population 
took no part in these excesses. 

In the field of business, when the Party proceeded against 
individual Jews, I intervened in every case that was brought to my 
notice and successfully stood up for the Jews so long as I held the 
post of Minister for Economic Affairs. In November 1935 I issued 
a ministerial communication to the head of the National Chamber 
of Industry which was passed on to all affiliated organizations : 

“On the 14th October I requested you to inform industrial 
groups that, pending the forthcoming re-assessment of the position 
of the Jews in industrial life, no steps are to be taken by afiiliated 
organizations against Jewish firms. Your communication, as well 
as other incidents, impel me to instruct the National Chamber of 
Industry to see to it that, aU industrial authorities, whether of 
regional or special character, are to refrain from any measures 
which coirflict with the laws at present in force, or which seek to 

la* 



354 Seventy-Six Years 

anticipate constitutional regulations which are the express preroga- 
tive of the Government. This applies particularly to the question 
of the participation of Jews in the domain of industry. Individual 
action in this connection has been repeatedly forbidden by the 
Government and the Leaders of the N.S.D.A.P., and I myself 
will not tolerate it. This applies particularly to measures which 
seek to restrict the scope of free industrial enterprise enjoyed by 
business undertakings on the ground of some special characteristic 
or other, or member of some organization, thereby causing a change 
in the conditions of industrial competition. 

“I would request you to ensure that any contravention in this 
direction is reported to me immediately.” 

Even if I did not succeed in maintaining the Jewish accredited 
brokers in their Stock Exchange employment, the right of attend- 
ance at the Berlin Bourse remained available to Jews throughout 
my term of office. I also managed to carry my point and ensure that 
up to 1937 inclusive, the prospectuses for Government Loans 
offered for public subscription among the many other banks, 
should also be underwritten by the Jewish banking firms of 
Mendelssohn, BleichrSder, Arnhold, Dreyfuss, Straus, Warburg, 
Aufhauser and Behrens. These announcements appeared in all the 
big newspapers. 

My attitude brought me into conflict with a whole crowd of 
Gauleiter. As an example of the mentality of these people, here is a 
letter which I received from Gauleiter Mutschmann when I 
acted on behalf of a Jewish firm in Chemnitz which was being 
harried and pestered by the Party, 

‘ ‘ I acknowledge receipt of your communication of the 30th Nov- 
ember 1936, and am very surprised at the attitude adopted by you 
in regard to the non- Aryan firm of Konigsfeld 65 Co. in Chemnitz. 
This attitude is contrary to the Nationd-Socialist outlook and in 
my opinion amounts to a sabotaging of the Fiihrer’s instructions. 

“I would ask you, therefore, not to effect any change in the 
present situation, as I should otherwise be compelled to resort to 
counter-measures which might not be altogether pleasant. I shall 
also take the opportunity to make your attitude to this case very 
clear to the Fiihrer. Anyway, I do not intend to inform the autho- 
rities under my control of your instructions. On the contrary, 
I am of the opinion that your attitude shows you to be completely 
the wrong man in the wrong place.” 

The tone of this letter is not exactly well-bred. It ranges from 
the forthright “is contrary to the National-Socialist outlook”, 
which in Mutschmann’s eyes is sufficient to deprive my inter- 
vention of any moral justification, to “counter-measxires which 



The Jewish Question and the Church Question 355 

might not be altogether pleasant”, i.e, to a blunt threat of violence. 
The letter ends in a characteristically vulgar manner. 

It was the more amusing that, when I went to Chemnitz to 
settle the case, Herr Gauleiter Mutschmann preferred not to be 
present. 

Another instance may serve to illustrate the legal confusion 
created by the Party in internal administration. The authorities of 
the district of Giessen cancelled the trade permit of a Jewish 
business. To my instructions not to obstruct the firm I received a 
reply from Gauleiter Sprenger, no less churlish than that of his 
colleague Mutschmann. In collaboration with Frick, the Minister 
for Internal Affairs, I succeeded in inducing even the Secret Police 
to carry out my instructions, whereupon Gauleiter Sprenger 
retorted by setting up his own police force in opposition to the 
Secret Police. 

Eventually, it came to the point where I was compelled to voice 
my opinion on the Jewish question in Government circles. A 
letter to the Minister for War dated 24th December 1935 contains 
the following passage; 

“No picture of the obstacles confronting my trade and foreign 
exchange policy would be complete if I ^d not refer again and 
again to the cultural obstructions which have aroused, and keep 
alive, feelings of antagonism and repugnance throughout the 
entire world and militate against international trade relations with 
us. The treatment of the Jews in matters relating to business, law 
and justice, the anti-Church movement of certain Party organiza- 
tions and the high-handed proceedings associated with the Gestapo 
are having a most detrimental effect on our armaments problem, 
an effect which, to say the least of it, could be considerably modified 
by the use of more judicious methods without abandoning our 
objective.” 

One day I received an invitation to a session of high-ranking 
Party officials under the chairmanship of Herr Frick, Minister for 
Internal Affairs. The matter under consideration was whether or 
not Jewish-Aryan cross-breeds with fifty per cent Jewish blood 
should be allowed to marry Aryans. Those with only twenty-five 
per cent Jewish blood would be allowed to contract such marriages. 
I listened in silence to the hubbub created by the discussion until 
Frick at length asked me what my own views were. The gist of my 
answer was roughly: 

‘ ‘ I don’t quite know why you have invited me to take part in this 
conversation. I don’t imagine that the economic reasons I could 
give in favour of granting to cross-breeds freedom to marry whom 
ffiey please would be sufficient to change your fundamental outlook. 



356 My First Seventy- Six Years 

But if you expressly ask me, then I will answer quite frankly that 
I do not share your feeling of contempt towards people of Jewish 
blood. In my opinion, German blood is strong enough to stand up 
to the trifling admixture of Jewish blood. If you are already pre- 
pared to allow twenty-five per cent cross-breeds to marry Aryans, 
I consider that you should extend this permission to the fifty- 
percenters, since in the next generation these fifty-percenters 
would have become twenty-five-percenters. Why are you so 
anxious to rebuild the thousand-year-old Reich with such Jewish 
haste?” 

Another discussion proceeded on less humorous lines. In order 
to arrive at a thoroughly clear understanding with the Party in 
view of the increasing number of actions against Jewish firms, I 
invited those Ministers interested in the subject, as well as the 
Party, to a discussion. This took place in the great council chamber 
of the Ministry for Economic Affairs in the presence of several 
Government Ministers and of Gauleiter Adolf Wagner (Munich) 
representing the Party, together with many other representatives 
of the Party and of official departments. The place was packed to 
capacity. I was only reminded of the details of this session when 
one of my staff, Mmisterialdirigent Heuser, described it under oath 
at my Ludwigsburg trial, in the following terms : 

“In the course of his persistent and exceedingly contentious 
statements Dr. Schacht repeatedly used the expression ‘barbarous ’ 
with reference to the Party, so much so that Herr Frick, the Minister 
for Home Affairs, protested against Dr. Schacht’s over-trenchant 
method of speech. The session had lasted nearly two hours ; Dr. 
Schacht’s attitude had been so aggressive that — apart from a few 
cautious provisos on the part of Frick — ^no one was bold enough 
to voice an actual contradiction. It finally led to an incident of 
which I stiU retain a particularly vivid recollection and which 
once again shed a glaring light on Dr. Schacht’s attitude to the 
Party. One of the younger officials, who introduced himself as 
representing the Ministry of Propaganda, undertook to challenge 
Dr. Schacht direct. He led up to a case in which Schacht had 
publicly defended one of his staff who had been attacked by a 
Party newspaper because his wife had dealt with Jewish tradesmen. 
He described Dr. Schacht’s method of procedure as uncalled-for. 
Any differences of opinion on the Jewish question between the 
Government and the Party should be straightened out among 
themselves instead of being dragged before the public in this 
fashion. Dr. Schacht had let him have his say, and then had gone 
for him tooth and nail. He, Schacht, had publicly intervened on 
behalf of one of his subordinates who had been publicly attacked 



The Jewish Question and the Church Question 357 

by the Party, and he would continue to do so in future. He would 
protect his employees against the Party. The Party’s action in the 
above-mentioned case was — ^toquotehis own words — blackguardly, 
barbarous, infamous. Each vehemently uttered word re-echoed 
through the Council chamber where deathly silence reigned.” 

A Jewish friend who had been baptized once told me to my face 
that anti-Semitism was based on the fact that Christians could not 
forget that the Jews had crucified the Saviour. This view seemed to 
me extremely naive. No Christian will ever entertain hatred of 
another religion. As I see it, there is one single factor which gives 
rise to the widespread unpopularity of the Jews. It is not the 
religious antithesis, of which Goethe has said that Judaism is 
further removed from Christianity than is heathenism. Rather is it 
the fact that owing to his ability, and whenever he resides in a non- 
Jewish community, the Jew endeavours to insinuate himself into 
the intellectual and cultural leadership of that co mmuni ty. Even 
in Germany the proportion of Jews who had established themselves 
as labourers or artisans was of the very smallest. No one grudged 
the Jews a free hand in commerce and industry. But when the legal 
and medical professions showed an unusually high percentage of 
Jews, when most of the theatres, the Press, the concerts, were under 
Jewish management, then this constitutes the incursion of a foreign 
element into the spirit of the hostess nation. All the above-men- 
tioned professions exercise a civilizing influence. And civilization, 
in the long run, is rooted in religion. With the exception of the 
newly created State of Israel there is no State which is founded on 
the Jewish religion. A nation whose civilization is rooted in Christi- 
anity will therefore always be at pains to preserve Christianity as 
the basis of its civilization and to discourage foreign elements in 
its cultural life. 

So long as the Jews fail to appreciate this fact they will come up 
against difiiculties, as the history of many nations has shown. 

I have been rooted and grounded in Christianity from my 
youth up, never narrow-mindedly but always on broadly tolerant 
lines. My religious conviction has never altered from my seven- 
teenth year onward, when I arrived at my own conclusions on 
the subject. For some years I had held to the idea that religion 
could get along without the Church. When I married, therefore, I 
thougS; I could dispense with the Church ceremony. It is thanks 
to my honoured teacher, Hans Delbriick, that I realized my 
mistake. 

If morality, right, justice and civilization spring from religion, 
it is impossible to envisage a State which does not manifest its 



358 My First Seventy-Six Years 

religious character in some form or other. The Church may have 
many faults, she may from time to time amend or change her 
outward usages, but as the strength and stay of the State she is 
indispensable. 

A common religious profession is essential for any community 
of life. One of the most insidiously disruptive statements ever 
made is that religion is a private matter. Religion cannot be a 
private matter. As exemplified in the Church it is the foundation 
of every State and of every national community. 

For the European nations the well-being of the State is bound up 
in the Christian principle, in the Person of Christ, in the gospel 
of the Christian love of one’s neighbour. This love of neighbour 
extends also to those adherents of other religious beliefs — to 
Mohammedans, Jews, Buddhists, Confucians, heathens. The 
State will grant them complete tolerance and protection. But it will 
not permit them to attain to those positions, nor can it allow them 
to exercise an influence which would admit of their directing the 
spiritual and moral life of the community along other than Christian 
lines. Religion is no private affair: it is the foundation-stone of the 
State. 

This realization led me, of my own accord, to have the Church 
wedding ceremony a few years after our civil marriage, and I have 
never wavered in my conviction. 

I had ample opportunity of demonstrating this conviction during 
the Hitler regime. The Party’s attack on the Church showed me 
plainly the brutalization that would result if such an attack were to 
succeed. I had more than one occasion to discuss these matters 
with Hitler and can recall the following statements he made : 

“I have always told Rosenberg one doesn’t attack petticoats 
or cassocks ...” 

Another time Hitler mentioned having told Rosenberg: 

“Keep your fingers out of that pie, Rosenberg. You’re neither a 
prophet nor the fovmder of a religion.” 

Hitler was particularly given to voicing his contempt of Rosen- 
berg as the following conversation goes to show: 

“I’ve made Rosenberg, who comes from Riga, editor-in-chief 
of the VoMsche Beoba^ter, and barely three months later the 
whole editorial office was chock-full of his Baltic compatriots.” 

To which I replied : 

“Don’t worry. Chancellor. Goethe himself said : “All Baltic peo- 
ple stick together like glue.” {Alle Balten zum Trotzskherhalteti),” 

I doubt whether Hitler himself had any real religious affiliations 
in spite of his many appeals to “Providence”. Probably he 
considered such matters solely from the point of view of his 



The Jewish Question and the Church Question 359 

struggle for power. That was why he let his followers have free 
rein in their attacks on the Church — ^he did not want to lose 
them. 

A few weeks before Christmas 1938 I was invited to tea with a 
family who had helped Hitler a lot in the days when he was still 
striving for power. According to the custom of the house I had to 
write something in the visitors’ book, I wrote; 

“No strength is worth anything, save moral strength,” 

Some weeks later Hitler visited the lady of the house and wrote 
in the visitors’ book that this was the loveliest Christmas of his 
life. That was after the Anschluss of Austria and Sudeten Germany. 
Then he riffled through a few back pages, came upon my entry, 
stopped short, shut the book with a bang and (as my hostess 
afterwards told me) threw it angrily on the table. 

One of the really godless members of the N.S.D.A.P. ranks was 
Gottfried Feder who, in addition to his fantastic currency notions, 
also went in for planning the towns of the future. One of these 
articles on town planning was accompanied by a pictorial layout. 
In the main square of the town were the town hall, the Party 
headquarters, the People’s Welfare Building, a sports club, a 
people’s hall; but in the whole plan there was not a single 
church. 

It was of course a sore point with the Party pundits that I 
openly proclaimed my Church membership and frequently drove 
to church at Dahlem in my official car to attend Pastor Niemdller’s 
services. Although the church was only five minutes away it gave 
me great satisfaction to know that the car, with its official flag, 
would be parked for over an hour in front of the church. 

On a certain day in December 1936, the National Committee 
on the Churches sent me a questionnaire regarding my attitude to 
the Church and had forwarded my reply in pamphlet form to the 
“Confessional Church” for Church election purposes. My reply 
was couched in the following terms : 

“I consider the propaganda laimched by certain circles against 
Church denominations is one of the factors most damaging to 
German national unity and to German activity in the rest of the 
world, for we are, and shall continue to remain, dependent on the 
rest of the world in our economic, intellectual and spiritual 
existence.” 

Some time later I received an official communication from Kerri, 
one of the Party Ministers and a humane man of sterling character, 
Kerri was Minister for Church Affairs and also Minister of Space 
Planning, for which reason he was generally known as Minister of 
Space and Eternity. His official communication ran: 



360 My First Seventy-Six Years 

“Enclosed I send you copy of a pamphlet from the Confessional 
Front with a statement by yourself. I would ask you to observe 
therefrom how statements of this kind by leading personalities of 
the Government are made use of by opponents of the Govern- 
ment for propaganda purposes in the Church conflict. Experience 
shows that not only is the Church policy of the State obstructed 
thereby, but the enemies of the Stale are incited and encouraged in 
their obstinate attitude. 

“From other information too it has repeatedly been brought to 
my notice that you exercise considerable influence on the aspira- 
tions of Church groups, I would therefore be greatly obliged if in 
future you would exercise restraint in matters relating to Church 
policy.” 

I knew very well that Kerri, a humane and kindly man, had only 
written this letter at the instigation of certain Party circles. The 
co m m u nication, however, afforded me a welcome chance of making 
my viewpoint clear. The following is taken from my reply: 

“ The quotation from the pamphlet sent me is from a communi- 
cation which, by request, I addressed to the National Committee 
on Churches as the official representative of the Evangelical 
Church, on the 5th December 1936. 

“If I am given the opportunity to express my views on Church 
questions within the German Government I shall refer with all 
the emphasis at my command to the disastrous effects likely 
to be produced by the policy of certain Party groups in this 
connection.” 

Notwithstanding my positive attitude to the Church I have never 
been interested in differences in Church matters. I am a convinced 
Protestant, but have always looked upon the common profession 
of the two denominations in regard to the Christian doctrine of 
salvation as the great essential and have always advocated every 
rapprochement between the two Churches. When we used to 
discuss the question of TJna Sancta in Ludwigsburg Internment 
Camp I always took an active part from the constructive angle. 
And during my four years as political prisoner I was very conscious 
of the predominance of pastoral work over the sermon. I have 
always been glad that the dignitaries of the Catholic Church who 
knew me did not withhold their sympathy in the very worst periods 
of outward tribulation. 

When that splendid character, Bishop von Galen of Miinster, 
preached his sermons against National-Socialism which have since 
become famous, I was not slow in openly voicing my appreciation. 
When His Holiness Pope Pius XII sent me his greeting by one 
of his Bishops, I took advantage of a visit to Rome in December 



The Jewish Question and the Church Question 361 

1952 to beg an Audience which His Holiness immediately granted, 
I experienced the great joy of meeting him again in a private 
Audience in which I simply expressed my respect and reverence 
for this Prince of the Church without touching on any one of the 
burning questions of the day. It was just a meeting between two 
human beings which left me with a feeling of deep thankfulness 
and admiration. 



CHAPTER FORTY-EIGHT 


Rearmament 

R earmament played a not inconsiderable part in the 
creation of employment, though it is entirely untrue to 
<.say that the creation of employment consisted solely of 
armaments. The first programme — ^the so-called Reinliardt Pro- 
gramme — ^provided only for repairs and restoration to houses, 
factories and machinery, but its expenditure amounted neverthe- 
less to one milliard marks. This was followed by the great Auto- 
bahnen Programme which in the course of years absorbed many 
milliards. J^rther, in all provincial districts, road improvements, 
new buildings, hydraulic works, 'embankments, etc., were put in 
hand. 

But the reason why armaments were very soon given priority 
was not merely their political objective but the fact that orders 
could be distributed among the large number of existing factories 
spread over the whole country, and could therefore be executed 
in equal proportions in every part of the Reich. For road construc- 
tion, AutobeAinen, embankments and the like the workmen had to 
be transferred from their homes to their places of employment, 
necessitating unwelcome family separations and considerable 
expense for accommodation. Orders for armaments which were 
despatched to factories throughout the country gave employment 
to the working man in his own neighbourhood and enabled him to 
remain with his family. 

Among the ineradicable icfiocies spread abroad nowadays by 
those who were unable to prevent Hitler’s rise to power is the one 
which persists in affirming that 1 financed the war deliberately 
engineered by Hitler, and the armaments necessary thereto.' The 
entire armaments programme, in so far as I helped to finance it, 
was in accordance with the political desire of all Parties in the 
Reichstag. After his rise to power, Hitler repeatedly demanded 
the limitation of armaments in all countries and agreed to it for 
Germany also if the others would do the same. Again and again 
he pointed out that the Versailles Treaty had agreed to the dis- 
armament of the victorious Powers after Germany — as actually 
happened — ^had disarmed. At the League of Nations sessions in 
Geneva the question of disarmament of all those taking part came 



Recmnmnent 


363 


up time after time, and time after time prominent foreign states- 
men pointed to the need for disarmament on the part of the 
Allies. At no period of its history did the Social-Democratic 
Party ever deny the necessity of military preparations for purposes 
of defence. 

From the very first I never contemplated any armament save 
that which would serve to defend Germany’s neutrality or to 
repudiate a possible attack. At the Niirnberg trial Keitel, Blom- 
berg’s successor at the War Office, submitted under oath the follow- 
ing table of annual expenditure on armaments : 


In the Budget Year 

1935- 1936 

1936- 1937 

1937- 1938 

1938- 1939 

1939- 1940 


Milliard Reichsmarks 
5 
7 
9 

II 

20-S 


Of these totals, the following amounts were provided from 
Budget resources, i.e. without any additional sums from the 
Reichsbank: 


In the Budget Year 

1935- 1936 

1936- 1937 

1937- 1938 

1938- 1939 

1939- 1940 


Milliard Reichsmarks 

x| 

3 i 

5 l 

II 

20*5 


From the end of the Budget Year 1937-38, therefore, the 
Reichsbank never paid or loaned another penny to the Reich. 

At the Nurnberg trial the American Chief Prosecutor expressly 
stated that no objection could be raised against armaments not 
intended or destined for a war of aggression. 

From the middle of 1935 onwards I strove consistently for a 
limitation of armaments. The uncertain and ever-inadequate 
amounts received from foreign exchange made my task easier. On 
the 24th December 1935, I addressed a detailed letter to von 
Blomberg, the Minister for War. The opening sentence ran; 

“You expect me to furnish sufficient foreign exchange to meet 
your requirements. In reply I beg to state that under prevailing 
circumstances I see no possibility of doing so.” 

Subsequently, in the course of many ministerial discussions, I 
repeatedly endeavoured to slow down and restrict armaments. 

My four-year period as President of the Reichsbank was due to 
expire in mid-March 1937. Since Hitler intended to appoint me 



364 My First Seventy-Six Years 

for another four years I began to consider whether I should accept 
office again. I was determined to do so only if loans to the Reich 
on the part of the Reichsbank were discontinued once and for all. 
Negotiations with the Minister of Finance and the Minister for 
War led to an agreement on the 6th March 1937 which was only 
arrived at because on two occasions I sent Herr Lammers (Secre- 
tary of Slate at the Chancellery) home after a fruitless errand. Herr 
Lammers had brought me the new document extending my period 
of office. Twice I sent him back with the information that I would 
only accept reappointment if the Mefo-bills of exchange were to 
stop. The agreement went so far as to stipulate that the Reichsbank 
would furnish the sum of three milliard Reichsmarks in addition 
to the nine milliards already in circulation. After that, however, 
the Mefo-bills were to cease. 

I had had ample opportunity in the meantime of experienc- 
ing Hitler’s unreliability and lack of straightforwardness, I told 
Herr Lanuners, therefore, that I was prepared to implement this 
agreement up to a total limited to twelve milliard Reichsmarks, 
but that I would accept an extension of office for one year only. 
Should Hitler, for his part, fail to abide by the agreement, I 
should resign my office at the end of one year. In this way I 
succeeded in putting an end to the Mefo-bills. I hoped I had also 
put an end to further armament. 

Hitler fulfilled the agreement to the letter, and in the following 
year endeavoured to raise money by the negotiation of fairly large 
loans. In 1938, the Minister of Finance did issue two big loans 
which were taken up by the public. The Reichsbank considered 
still further how armaments might be restricted and recommended 
the issue of yet a third loan, which was accepted for sale by the 
usual banking syndicate, of one and a half milliard Reichsmarks. 
Now, however, it became evident that the capital market was 
exhausted. The banks were left vrith half a milliard on their 
hands, clear proof that with the loan market fully engaged no 
money would be available for further armaments. 

On the 2nd January 1939 I went to see Hitler at Obersalzberg 
to report on my London discussions of December 1938. On this 
occasion Hitler himself referred to the financial situation and told 
me he had now found a way of raising funds to meet Government 
expenditure. I pointed out that the last loan had demonstrated the 
complete exhaustion of the capital market, and furthermore, that 
of the so-called Jewish indemnity of one milliard Reichsmarks 
decreed in November — of which the first quarter had been 
extorted-— only one hundred and seventy million Reichsmarks had 
been paid in cash; for the remaining eight millions of the first 



Rearmament 365 

quarter the Minister of Finance had had to accept real estate lots, 
securities, etc., as payment. Whereupon Hitler remarked; 

"But surely we can issue notes against these securities.” 

Now the cat was out of the bag! I had once said to Hitler on a 
previous occasion : 

"There are only two things. Chancellor, which could bring 
about the downfall of the National-Socialist regime — a war, and 
inflation.” 

Now I could see inflation in the offlng. At that time I still 
thought that one might envisage the possibility of preventing 
inflation from being followed by war. 

I remained silent, and Hitler continued : 

“After I get back to Berlin I will ask you and the Minister of 
Finance to come and talk matters over and will go into the details 
of my financial plans.” 

“Then, Chancellor, before this discussion takes place, perhaps, 
you will allow me to hand you a statement by the Reichsbank on 
the subject.” 

This statement, signed by all eight members of the board of 
directors, was handed to Hitler on the 7th January. It contained 
the following sentences: 

“The currency is threatened to a critical extent by the reckless 
policy of expenditure on the part of public authorities. The 
unlimited increase in Government expenditure defeats every 
attempt to balance the Budget, brings the national finances to 
the verge of bankruptcy despite an immense tightening of the 
taxation screw, and as a result is ruining the Central Bank and the 
currency. There exists no recipe, no system of financial or money 
technique — ^be they never so ingenious or well thought-out — ^there 
is no organization or measure of control sufficiently powerful to 
check the devastating effects on currency of a policy of unrestricted 
spending. No Central Bank is capable of maintaining the currency 
against an inflationist spending policy on the part of the State. 
During the two extensive actions connected with foreign policy 
in the East and in Sudetenland a rise in public expenditure was 
inevitable; it is a fact, however, that since the conclusion of these 
activities there is no sign of a reduction of this spending policy; 
on the contrary, everything points to a deliberately planned rise in 
expenditure, and it therefore becomes an overriding duty to draw 
attention to the effect of this policy on the currency of the country. 
The undersigned members of the board of directors have, con- 
sciously and gladly, staked all they possessed to help in achiev- 
ing the great objectives set before us ; but a limit has now been 
reached and they must now call a halt.” 



366 My First Seventy-Six Yean 

Nothing further came of Hitler’s proposed discussion with 
the Minister of Finance and myself. 

On the 20th January 1939 I was relieved of my ofl&ce as Presi- 
dent of the Reichsbank. 

Since, in Niirnberg, I was charged only in connection with 
preparations for war — no charge referring to war crimes or 
inhuman conduct was ever preferred against me — ^the Niimberg 
verdict on my participation in the financing of armaments is 
particularly valuable. The final paragraph in my acquittal by 
the International Military Court reads: 

“As early as 1936 Schacht began, for financial reasons, to 
advocate a limitation of the armaments programme. Had the 
policy advocated by him actually been put into practice, Germany 
had not been prepared for a general European war. His insistence 
on his policy eventually led to his dismissal from all positions of 
economic importance in Germany.” 



CHAPTER FORTY-NINE 


Hermann Goering 

H ermann Goering was the first National-Socialist with 
whom I became personally acquainted. He came of a 
middle-class family, but his mother (his father’s second 
wife) was not of the same standing as the former German Resident 
in South-West Africa. Nevertheless, Goering was brought up in 
decent surroundings and educated at the Military Academy. He was 
an oflScer in the First World War and ended up as a Captain in the 
Luftwaffe. He was possessed of personal courage, not particularly 
cultured, but with an intelligence well above the normal. So long 
as he was obliged to live modestly his good qualities predominated. 
The choice of his first wife is a particularly strong point in his 
favour ; and one cannot but admire his behaviour, both before and 
after his second marriage. 

Goering’s unfortunate characteristics began to develop when, 
owing to his position in the Party, he realized the great opportunities 
that presented themselves to acquire wealth and influence. His 
greed manifested itself in an astonishingly short space of time. 
I remember how, soon after the Party assumed the reins of govern- 
ment, some business acquaintance cheerfully and cunningly 
summed him up as “a grabber”. Goering openly flaunted his 
greed as only a man can do when he knows he has the power, and 
at the same time is sufiiciently unscrupulous to set himself above 
law and justice. 

Since I was on very good terms with him, before I realized his 
dangerous qualities, I attended his birthday party in January 1934 
at which my wife and I gave him a very fine picture of a bison by a 
well-known Berlin woman artist who specialized in animals. At 
dinner the seat on Goering’s right — ^the place of honour — ^was 
occupiedby a man unknown to me, who afterwards turned out to be 
a successful publisher; throughout the entire period of National- 
Socialist rule he did extensive business with Goering to his decided 
advantage. He owed his position at this dinner-party to the fact 
that he had presented his host with a shooting-br^e and four 
horses. 

The Reichsbank’s wedding gift to Goering was a dinner- 
service in the famous Breslau procelain from the Royal China 



368 My First Seventy-Six Years 

Factory. After enquiring beforehand whether anyone else had 
thought of it, Gocring’s office replied in the negative, and at the 
same time asked that a list of the individual pieces comprising the 
dinner-service might be forwarded. We sent the list. It was returned 
with the comment that the service was incomplete without two 
matching many-branched porcelain chandeliers and the request 
that these be added. 

At a later birthday gathering I noticed a brilliantly gilt cocktail 
cabinet, a present from the Deutsche Arheitsfront — presume the 
workers themselves knew nothing about it. 

Besides his greed, Goering developed an ostentatiousness which 
frequently verged on the ridiculous. Not only did he collect pre- 
cious stones, gold and platinum jewellery in vast quantities, he 
wore them. He seized every opportunity to appear in a new uniform 
or new suit. Once, when I visited Karinhall with some friends from 
abroad to see the aurochs enclosure, Goering received us wearing 
high leather Landsknecht boots, a leather jerkin, white shirt-sleeves, 
a huntsman’s broad-brimmed hat on his head and a six-foot 
hunting-spear in his hand. In contrast to the simplicity of Hitler’s 
persond life, Goering enjoyed to the full the advantages of wealth 
afforded him by his position, indijSlerent to, even contemptuous 
of any legal or moral considerations. 

Curiously enough, Goering’s overbearing manner did not 
detract from his popularity. "V^erever he appeared at gatherings 
or on other occasions where the populace were assembled he 
impressed everybody by his pompous ways and his deliberately 
assumed jollity and typical German bluntness. 

At first Goering tried to establish himself to a certain extent 
independently, but on a level with Hitler. He looked upon himself 
as cast in a superior mould and liked to be described a Renais- 
sance type. I remember how on one occasion, after an argument 
with Hitier, he spoke of him to me as “that bounder’’ {^'dieser 
Schlatoiner”). But the more unethical Goering’s conduct, the 
greater his dependence upon Hitler. Only a few years later, when 
my discussions with Hitler had already acquired a certain acerbity, 
I once asked Goering to back me up in my contentions. 

“Please, Herr Goering, the next time you see Hitler, do make 
him see that matters can’t go on like this.” 

“I promise you faithfully, Herr Schacht, that I will.” 

When a few days afterwards I enquired as to the result of his 
conversation with Hitler, Goering admitted : 

“You know, Herr Schacht, I always intend to tell Hitler exactly 
what I think but when I enter his room my heart invariably sinks 
to my boots.” 



Hermann Goering 369 

The only people whose heart doesn’t sink to their boots are 
those whose conscience is clear and whose conduct is irreproach- 
able — ^neither of which could be ascribed to Goering. 

It was, unfortunately, owing to me in the first instance that 
Goering obtained a decisive influence in economic matters. I had 
still failed to realize that even the leading and most responsible 
brains in the Government were not prepared to obey the laws of 
the land. I still believed that I could induce men like Hitler and 
Goering to uphold the fundamental principles of good citizenship. 

At the beginning of 1936 the Reichsbank ascertained that 
Central Banks abroad were offering us large parcels of Reichsbank 
notes to be converted into foreign currency. Although everyone 
in Germany was legally bound to hand over to the Reichsbank all 
foreign bills received, the Party had so far never obeyed these 
instructions, notwithstanding the receipt of considerable sums 
from its organizations abroad. For good or ill, the Reichsbank 
had overlooked it. Now, however, we were faced with an open 
abuse which might have dangerous effects on our currency. The 
flood of German bank-notes now flowing back into the country 
from abroad could only mean that Party officials had sent these 
notes abroad unmolested by the Customs and foreign-exchange 
control. We received confirmation of this when on one occasion 
a parcel of bank-notes which we had sent to one of the Party 
centres was returned to us by the Dutch Central Bank in exactly 
the same wrapping in which it had left the Reichsbank. 

I laid the matter before Hitler and explained to him that I 
obviously lacked the authority to compel Party officials to observe 
the regulations, I therefore requested that Hitler would appoint a 
man who would lift the burden of exchange control from my 
shoulders, and in reply to his enquiry I suggested Hermaim 
Goering. At the end of April 1936 I was relieved of the exchange 
control. Goering immediately accepted the new task at Hitler’s 
*hands with the feeling that here was a jumping-off place for a 
fresh rise to power. 

The opportunity to use this stirrup to swing himself into the 
saddle presented itself to Goering at the Party Conference of 1936, 
My incessant struggle to ensure saving and careful use of , raw 
materials and foreign exchange, and my steady insistence on a 
slowing-down of armaments must have gradually got on Hitler’s 
nerves. A few days prior to the opening of the Conference in 
September 1936, Hitler informed me that he intended, at the 
Conference, to announce a new economic programme, but without 
giving me any idea of its contents. I immediately scented disaster 
and tried to get hold of von Blomberg, the Minister for War. 



370 My First Seventy-Six Years 

He would have been the only one among all the ministers to whom 
Hitler might perhaps have listened. Blomberg let me down com- 
pletely. Mter I had once again explained the economic situation 
in detail, Blomberg plucked up courage and admitted : 

“I realize fully that you are right, Herr Schacht, but you Imow I 
am quite convinced that the Fiihrer will find a way out of all our 
troubles.” 

What else could I do but take my leave with the words: “God 
grant that your faith be justified.” 

At the Conference Hitler announced the programme of autarchy 
of the so-called “Four Year Plan”, and Hermann Goering was 
appointed to carry it out. In order to do so, Goering built up an 
organization, which soon had a staff of several hundred, next to 
the Ministry of Economic Affairs. 

The Four Year Plan achieved comparatively little in the way 
of positive results, save that there was a great deal of unnecessary 
to-do over everything, which caused an extensive and rapid 
revival of defence preparations abroad, whereas I had always tried 
to work as unobtrusively as possible. Whatever was successfully 
accomplished under the Four Year Plan was nothing but the 
continuation of measures I had inaugurated as Minister for Econo- 
mic Affairs. Now, however, everything was rushed and exaggerated. 
The extraction of benzine from coal had been organized by me. 
The equipment of a whaling fleet had been started by me. The 
wholesale cultivation of staple fibres had been set on foot, thanks 
to the steps I had taken. The Four Year Plan did not put forward 
any of these things as new ventures — ^it mercly boosted them on a 
large scale. 

The extension of mining operations, too, had been tackled by me. 
At the end of 1937 I had linked them up with the Four Year Plan 
and with industry, when the founding of the Hermann Goering 
Works took me completely by surprise. Hermann Goering sank 
not millions but milliards in the exploitation of the so-called 
Salzgitter ore in Brunswick. It was immediately apparent that 
this mine would never be a paying concern under the prevailing 
methods of treatment, so the Hermann Goering Works bought up 
every similiar undertaking they could lay hands on which showed a 
profit and would serve, to some extent at least, to conceal the loss 
on the processing of the ore. The necessary funds had one and aU to 
be raised by the Reich by means of loans or in-payment of shares. 

At first I tried to continue to run my Ministry in conjunction 
and alongside this Four Year Plan organization, but very soon 
came up against measures which I neither could nor would 
countenance. 



Hermann Goering 3^1 

On the 17th December 1936, Goering called a meeting of a large 
number of business leaders in order to acquaint them ■with his 
intentions. At this meeting he put forth one idea after another 
which were clearly contrary to any political system and any 
economic principle. If any person brought foreign bills of exchange 
into the country (whether by legal or illegal means) no one would 
stop him. The only people to be punished would be those who re- 
sorted to illegal methods without bringing in any foreign exchange. 
Goering demanded that industry should produce, no matter 
whether it made a profit or loss in so doing. 

Some few weeks later, on the occasion of my sbctieth birthday, 
there was a special meeting of the National Chamber of Industry 
at which I was due to speak. It was practically the same audience 
to whom Goering had spoken. When I referred to his statements — 
though without expressly mentioning him by name — everyone 
knew that my remarks were directed against Goering. 

“Gentlemen,” I said, “I want first of all, in all seriousness, to 
refer to the factor which is absolutely fundamental to the art of 
government: no economy can function and prosper in any State 
which is not founded upon firmly established principles of law 
and order. One of the purposes of legislation, among others, is to 
guarantee the working of the national economy. Therefore, gentle- 
men, if somebody says : Never mind circumventing the law and the 
regulations laid down by law — it doesn’t matter in the least — 
warn you that I shall take proceedings against every person whom 
I know to be evading the regulations decreed by law.” 

That was a hit at Goering’s foreign exchange policy. The 
follo'wing sentences were directed against Goering’s conception 
of business : 

“All work done on uneconomic lines is a loss. When some- 
one says: Your job is production; whether or no you produce 
economically is not important — tell you that when you pro- 
duce uneconomically you squander the stuff of which the German 
people is made. If I sow a hundredweight of corn to the acre and 
harvest only three-quarters of a hundredweight it’s the sheerest 
idiocy imaginable. I caimot and dare not indulge in imeconomic 
methods just because I might happen to feel like it, for in so doing 
I should be consuming the very life substance of the German 
people.” 

I was fully aware of the pungency of my remarks and of the 
conflict with Goering that would result, and I began the concluding 
sentences with the words : 

“ So, my friends, if it be given to me to continue working with 
you for any length of time ...” 



372 My First Seventy-Six Years 

The end of my official economic activities was not long in coming. 
The first stage took the form of a conversation with Goering in 
the course of the next day or two : 

“A few days ago, Herr Schacht, in the presence of the leaders 
of German industry, you uttered statements directed against 
the principles of economic policy which I had laid before these 
gentlemen.” 

‘T did, Herr Goering. And in tlie event of your again proclaim- 
ing such wrong-headed economic policy I shall oppose it even 
more drastically.” 

The Ministry for Economic Affairs and the Four Year Plan 
organization continued to work side by side. Goering issued one 
order after another, all beginning with the formula: “During the 
course of the Four Year Plan ...” So long as these orders did 
not encroach on my preserves I held my peace. One vexatious 
feature was that the placing of all armament orders was done 
through Goering and his Four Year Plan organization, which 
resulted in all the leaders of industry flocking to that organization. 
It must not be thought that I am criticizing such action. The 
first job of every leader of industry is to keep his business going 
and provide a livelihood for his employees. Responsibility for the 
actual type of employment did not lie with him but with the 
political authority. 

Towards the end of July 1937, Goering issued an order to the 
mining industry without first submitting it to me for my opinion 
and verdict, although the care of the mining industry came within 
my province. Further, he suggested that I should also call in the 
last remaining foreign securities still in private hands and use them 
to obtain raw materials from abroad. I took advantage of both 
these actions to draw the fundamental dividing-line between 
Hermann Goering’s idea of economics and my own, in a letter 
dated 5th August 1937, from which I reproduce a few extracts : 

Thanks to the new trade policy inaugurated by me, imports of 
raw and serai-processed materials have risen from twenty-six 
million tons to not less than forty-six million tons. In face of this, 
it is already apparent that foreign trade afforded us a quicker and 
better chance of increasing our supplies of raw materials. I seized 
this chance by transferring our exports to those countries providing 
us with raw materials, and by a special application of the clearing 
system avoiding cash pa3anent in foreign exchange. 

Again and again I have referred to the need for an increased 
export trade and have done my utmost to achieve this. The 
excessive requisitioning of our industry for home orders naturally 
reacted adversely on industry’s willingness to export. The excessive 



Hermann Goering 373 

requisitioning of raw materials and labour for public buildings, 
armaments and the Four Year Plan threatens to bring about a 
decline in our export trade. I wish to make it perfectly clear that if 
there is a decrease in the foreign exchange accruing to us through 
exports, it stands to reason that the supply of raw materials will 
also slow down and this will lead to further gaps in our provision 
for buildings, armaments, and the Four Year Plan. 

Therefore, in addition to increasing our home-produced raw 
materials, our chief aim must continue to be to increase our 
foreign exchange income by means of exports. Notwithstanding 
this, one of ypur first steps was to order the seizure of all foreign 
securities in German possession as well as the speeding-up of Ae 
collection of export debts and the realization — to the greatest 
possible extent — of German shares abroad. In so doing you have 
plundered part of our capital and deprived our current foreign 
exchange income of the regular payments in interest and dividends 
accruing therefrom. Your new project for increasing the home 
production of iron ore involves the expenditure of many hundreds 
of millions, for which up to now no cover is available. The provision 
of bank-notes and money in account does not imply simultaneous 
provision of raw materials and foodstuffs. You can’t bake bread or 
cast cannon from securities. To invest raw materials and labour in 
new undertakings to the extent you have planned must lead to 
further restrictions in the allocation of raw materials to those 
industries which manufacture goods for export and for consumption 
by the people at home. We are already experiencing a shortage of 
many consumer goods in our daily life. 

I brought my technical comments to a close as follows : 

You will remember that I declared to you months ago that 
uniformity is indispensible to economic poUcy, and that I urged 
you to arrange matters in such a way as to enable you to take over 
the Ministry for Economic Affairs yourself, I have previously 
stated that I consider your policy on matters of foreign exchange 
to be wrong and I am not able to share the responsibility for it. 

I sent a copy of this letter to Hitler with the request that 
he would release me from my office as Minster for Economic 
Affairs, 

This caused Hitler no little embarrassment. For me to leave at 
this particular juncture would be highly inconvenient for him. 
I knew that I should experience considerable difficulty in obtmning 
my release. In a totalitarian state it was not possible for a Minister 
simply to resign his post, as this necessitated the consent not only 
of ffie Chancellor but also of the President of the Reich.. Hitler 
combined both in his own person. 

Hitler immediately summoned me to Obersalzberg where a 
long conversation took place between us on the iith August. At 



374 Seventy-Six Years 

that time. I did not yet realize the extent to which Hitler, mentally, 
had already ranged himself against me. In connection with the 
announcement of his programme of autarchy at the Party Confer- 
ence in September 1936, Hitler had prepared a secret memorandum 
from which Goering read some extracts to me and one ortwo others. 
I only came to know the full context of it when my fellow- 
prisoner Speer (who had received a copy from Hitler when he took 
up his ministerial appointment) acquainted the court of it. The 
parts which Goering had not I'ead to us on that former occasion, 
and which I then heard for the first time in Niirnberg, embodied 
a single protest against my economic policy. I quote only three 
sentences : 

“It is not the duty of national economic institutions to rack 
their brains over methods of production. That has nothing 
whatever to do with the Ministry for Economic Affairs. 

“Here I must take the strongest exception to the assumption 
that an increase in raw materials can be achieved by a limitation of 
national armament. 

“The contention that the whole of Germany’s blast-furnaces 
need to be rebuilt is not worth considering, and above all it has 
nothing to do with the Ministry for Economic Affairs.” 

Perhaps it was a good thing — ^for the sake of my discussion with 
Hitler — ^that I knew nothing of these remarks when I went to 
Obersalzberg. I could thus proceed on the assumption that Hitler 
would to some extent come to an unbiassed decision. 

Outwardly our conversation was on the most friendly footing. 
I met Hitler on the sun-bathed terrace in front of the house, 
surrounded by his faithful henchmen, among whom was Speer. 
Hitler took me into his spacious study where the windows stood 
wide open on this warm summer’s day — which meant that much of 
our talk must have been heard outside. 

Hitler begged me urgently to withdraw my resignation, but 
he avoided all objective treatment of economic questions and only 
insisted that he could not part with me. 

To which I replied : 

“It is absolutely essential. Chancellor, that the country’s 
economic policy should be conducted on ui^orm lines. Since my 
ideas are diametrically opposed to Goering’s I must ask you to 
decide whether you want to adopt his ideas or mine. I should not 
be personally offended in any way if you were to decide in favour 
of Goering,” 

Still Hitler evaded replying to my technical arguments; rather 
he continued to urge : 

“Dear Herr Schacht, you must come to an understanding with 



Hermann Goering 375 

Goering. I do beg of you to make yet another effort to arrive at 
some uniform modus operandi with Goering. I don’t want to lose 
your co-operation whatever happens.” 

While I assured him that there was not the slightest chance that 
two such widely differing conceptions could ever be reconciled, 
Hitler kept returning to the personal aspect and overwhelmed me 
with expressions of appreciation for everything I had hitherto 
achieved. For my part I was fully aware that Hitler only wanted 
to gain time to find a way out of his temporary discomfiture. So I 
remained unmoved even when Hitler finally assured me, with real 
tears in his eyes ; 

“But Schacht — I’m fond of you.” 

And when, nevertheless, I persisted in my attitude, he said : 

“But you surely won’t refuse to have another talk with Goering. 
I will gladly give you ample time for it. If, at the end of two months, 
you tell me again that you cannot come to a uniform outlook on 
German economic policy, and therefore abide by your wish to 
resign, I will do as you ask.” 

No one was more glad than I to hear these words. I immediately 
expressed my agreement and changed the subject, commenting 
on the beautiful summer weather and on the lovely house at 
Obersalzberg. Then I asked to be allowed to leave, whereupon 
Hitler accompanied me to my car. 

Goering replied to my letter of the 5th August with a communi- 
cation dated the 22nd August, considerably longer than mine. 
My answer of the 26th August was very brief : 

“I conclude, from the statement in your letter of the 22nd 
inst. that in our respective conceptions of economic policy there 
are fundamental differences which — as I hope — ^will lead the 
Fiihrer to decide to entrust the conduct of German economic 
policy to your hands.” 

This exchange of correspondence wth Goering was followed by 
a further talk with Hitler at the beginning of October, after which 
I wrote the letter which I reproduce below : 

Mein Fukrer! 8 ik October 1937. 

My dear Chancellor, 

Following our conversation of the 6th inst, I beg to point out 
that a successful German economic policy can only be achieved 
under a central authority. In. view of the immense importance of 
our economy in relation to the preparedness of our defence force, 
it is impossible to tolerate the proximity of a heterogeneous crowd 
of business officials, the continual intervention by outside elements, 
or the permanent jamming of economic activities by the Deutsche 
Arleit^ont. 



376 My Seventy-Six Years 

There can have been only one reason for the appointment of a 
Special Commissioner for the Four Year Plan, namely, to invest this 
particular post Tvith the authority of a person of high standing 
alike in the State and the Party, as well as to direct the trend of the 
movement to the attainment of the desired objective. In acordance 
with this conception, Herr Goering, the Prime Minister, had 
always stated that he did not intend to set up any new adminis- 
trative machinery, but in order to achieve the necessary results, 
would make use of existing Ministries whilst upholding their 
policies and responsibility. 

In actual fact the exact opposite has happened. The Four Year 
Plan establishment today comprises several hundred persons, and 
the executives of individual Ministries are ignored and over- 
ridden at will. 

There can however be only one head of Economic Affairs. 
Who that head is to be, you, mein Fiihrer, must decide according 
to the measure of your confidence in the abilities and loyalty of the 
person appointed. Special Commissioners — including therefore 
the Special Commissioner for the Four Year Plan — can deal only 
with planning, proposed measures and public propaganda, but 
not with the executive, who must proceed according to existing 
Government machinery. Hitherto, if individual Ministries (Eco- 
nomic, Food, Labour, Trade, etc.) were at odds with one another, 
Goering, as Prime Minister and President of the so-called Cabinet 
Council, has always been able to settle matters. This procedure 
should continue to be followed in future. In an emergency arising 
from questions of principle, the correct procedure is to approach 
you, mein Fiihrer, and leave the decision in your hands. 

In case, mein FUkrer, you do not intend to vest the conduct of 
Economic Affairs — including the executive — in the central author- 
ity, i.e. the Special Commissioner for the Four Year Plan, but to 
allow the Ministry for Economic Affairs to continue as such, I 
have ventured to set forth on the enclosed sheet a few points 
without which I am firmly convinced one cannot expect to run the 
Ministry of Economic Affairs in a responsble fashion. 

It may amuse you to note that popular opinion has its finger on 
the spot in these matters. Today I found these verses on ray desk : 

“ Said Goering, just give me four years, and you’ll see 
From the shackles of money I’ll set industry free ; 

Here’s Schacht as hostage in the interim. 

If I should bolt, you can strangle him.” 

A prospect which — spealung personally — ^fails to attract me. 

I remain, inein Fiihrer, 
as always. 

Yours faithfully ...” 

Being determined that my request to resign should stand, I 
departed on leave on the 5th September ; nor did I return to 







Willi Gi'iieral Nei^uib in 1953 Willi his second wife, and former Prime 

Minister, Mirza Ismael of Hyderabad 



Dr. Mossadeq receives the Author in bed at the climax of the Anglo-Iraniaii Oil Dispute, 1952 




Hermann Goering yjj 

Ministry for Economic Affairs. Since no decision was taken on my 
above-mentioned letter, I gave notice to Hitler of my resignation, 
the two months having meanwhile elapsed. Needless to say, a 
further discussion with Goering which, at Hitler’s request, took 
place on the ist November, brought no agreement. When Goering 
finally said: “But surely I must be able to give you instructions,” 
I took my leave with the words: 

“Not to me — ^to my successor.” 

That was my last encounter with Goering. Our next meeting 
was in prison at Niirnberg when we were taken to a cell with two 
bath-tubs where — I in one and Goering in the other — ^we each 
proceeded to soap ourselves all over. Sic transit gloria mundi! 

At last, on the a6th November 1937, my request to resign was 
granted. Although more than three months had elapsed since our 
agreement as to my departure, Hitler had found no suitable 
successor for my office. There remained nothing for him but to 
entrust Hermann Goering with the Ministry of Economic Aflfairs. 
Not till the following spring was Walter Funk appointed to the 
position. 

When Goering entered my study in the Ministry he exclaimed: 

‘ ‘ How can one indulge in great thoughts in such a small room ? ’ ’ 

Then he sat down at my writing table, got on -the telephone to 
me at the Reichsbank and bawled exultanfiy down the wire : 

“Herr Schacht, I am now sitting in your chair I” 

Take care you don’t come a bad crash! I thought, and replaced 
the receiver. 


13 



CHAPTER FIFTY 


Foreign Policy 

I HAYE repeatedly insisted that I have never laid claim to being 
a politician. Quite obviously I am minus certain qualities neces- 
sary for such a career. It seems to me also that a politician’s 
reputation does not always depend so much on his ability as on 
favourable current circumstances which contribute to his success. 
I don’t believe Mussolini’s saying, that men make history. The men 
who have gone down in history as great politicians were very often 
only the instruments of their era. When the time for a new percep- 
tion was ripe it favoured many a politician who, for all his good 
intentions and efforts, would otherwise have been doomed to 
oblivion. 

Economic policy is a part of general politics. With the increasing 
importance ^at economic policy has assumed for Europe since 
the eighteen-nineties, it was unavoidable that I should be drawn 
into questions of foreign policy. I have described my endeavours 
in London and Paris during the early nineteen-twenties to avraken 
understanding of the idea that reparations d la Versailles are 
thoroughly mischievous. In the years that followed I pointed out 
again and again that to make it possible for Germany to obtain 
raw materiak and foodstuffe from overseas territories by her own 
labour and with her own currency would provide the only secure 
basis for conditions in Germany to develop on peaceful lines. 

On this subject, as on the subject of currency, I was obliged to 
refute the classic principles of the doctrine of free trade. My study 
of British mercantile authors had shown me clearly that tihere is 
nothing of the abstract science about political economy. It was on 
their trade requirements that the mercantile writers had based 
their theoretical claims with which they had been able to found and 
to protect their wool industry and their shipping. 

After Britain had succeeded in establishing her great industrial 
advance and the superiority of her merchant fleet, British political 
economists began to raise freedom of trade, i.e. unrestricted com- 
petition, to the level of a standard economic theory, culminating 
in the moat-favoured-nation principle which would have ensured 
Britain’s economic supremacy for all time, had not other countries 
finally rebelled against it from sheer necessity. The so-called 



Foreign Policy jyg 

classic political economy owes its long reign to the brilliant propa- 
ganda with which British scientific economists bemused the brains 
of the Continent. And if an economist should occasionally seek 
to defend the interests of his nation, he was misunderstood and 
derided by his own countrymen— especially if he were a German, 
such as Friedrich List. 

Economic freedom is like political freedom — an ideal, towards 
which men may confidently strive, but impossible to realme so 
long as not everyone thinlcs along ideal lines. The saying, “What- 
ever benefits my country is right”, I have always looked upon as 
criminal, for right and justice are rooted in divine principle. On 
the other hand, the aim of every economic policy must be to ensure 
the possibility of livelihood for its own people from an economic 
standpoint : that has always been the foremost principle in all my 
dealings. 

As early as 1926 I gave a lecture to the Charlottenburg Branch 
of the German Colonial Association, under the chairmanship of 
Duke Adolf Friedrich of Mecklenburg, at which I put forward the 
claim that one or other of Germany’s former overseas territories 
might be transferred to her for purposes of economic development. 
Even at that time I described as immaterial the question of German 
sovereignty over such territory. I was concerned solely with the 
economic development which should be undertaken by German 
entrepreneurs with German currency, for only through the use of 
our own currency would the question of obtaining foreign exchange 
be reduced to negligible proportions. 

Today, the opening up of undeveloped territories is universally 
recognized in fine phrases and resolutions as an essential for world 
economic policy. In practice, however, it is not possible for any 
German entrepreneur to obtain free entry into former German 
territories and set up in business without the permission of the 
British or French Mandatory Authorities. No international law 
serves to protect him against the arbitrary actions of the Mandatory 
Governments to which he is subjected, should occasion arise. 

Following the experience of two World Wars the whole world 
knows today that the problem of Germany is the central problem 
of Europe. If we do not succeed in making it possible for Germany 
to procure her own raw materials and her own foodstuffs, Ger- 
many’s social problem will remain a threatening and disrupting 
factor in world politics and world trade. 

Hitler, of course, was aware of this vital problem. The more I 
had cause to fear that he might be seeking other solutions, the 
more I redoubled my efforts to get -him to faU in with my ideas for 
overseas economic development. By the early summer of 1936; I 



380 My First Seventy-Six Years 

had brought him to the point of agreeing to a suggestion of mine, 
I explained to him that it must likewise be to the advantage of the 
Allies to find a solution to the German people’s need for raw mater- 
ials and foodstuffs. I asked him, therefore, to consent to my going 
to Paris, where I proposed to discuss the subject with the L6on 
Blum Government then in office. After prolonged arguments he 
gave his written consent to my undertaking the journey, for which 
I made my preparations with M. Fran9ois-Poncet, the French 
Ambassador in Berlin. M. Fran^ois-Poncet informed his Govern- 
ment of my intention and ascertained, to my great pleasure, that 
L^on Blum would receive me and tallc over the matter. 

My subsequent stay in Paris and my conversations with L6on 
Blum and his ministers — Auriol (Minister of Finance and now 
President of the Republic), Delbos (Foreign Minister), Bastide 
(Trade) and Spinasse (Economic Affairs) — belong to some of my 
pleasantest recollections. I was received with kindliness and 
courtesy, and instead of the rejection which Hitler had feared, I 
encountered widespread appreciation of the fact that a solution 
of the question I had broached would do a great deal to ensure 
peace. 

It was only natural that L6on Blum, for his part, should enter- 
tain doubts as to Hitler’s sincerity, an attitude which I entirely 
understood. I remember one of our conversations, walking in the 
garden of the Elysfe, when he expressed his surprise that Hitler 
should have consented to my making the attempt, particularly 
where it concerned himself, a Social-Democrat Prime Minister. 

“ Surely Hitler Imows, Monsieur Schacht, that ...” 

“Certainly, Mr. Prime Minister,” I cut in, “Hitler knows that 
you are a Social-Democrat, a Freemason, and a Jew. But he has 
nevertheless empowered me to put forward these proposals. Your 
Ambassador in Berlin is fuUy aware of this.” 

L6on Blum announced his readiness — ^without prejudice to the 
question of sovereignty — ^to explore the possibility of transferring 
to Germany the Mandated Territory of the Cameroons for 
purposes of economic development, but stressed the fact that he 
would have to contact the British Cabinet on the matter, a necessity 
which I could not but acknowledge. During the months that 
followed, Blum went into the question thoroughly with the British 
Government and I acquainted my friend, Montagu Norman, with 
the situation. 

The attitude of the British Government was at first negative, 
then hesitant, and finally not at all averse from entering into a 
discussion of the circumstances. Unfortunately, all this took more 
than six months. In the spring of 1937, matters had so far advanced 



Foreign Policy jgi 

that the subject was to be discussed, along with others, at a pre- 
viously arranged visit to London by Baron von Neurath, the 
German Foreign Minister, Then, suddenly, there occurred the 
Spanish Almeria incident which sent Hitler off at a tangent. 
Neurath’s visit to London was cancelled ; the opportunity was lost. 
A more ready acquiescence on the part of Britain might have given 
a different turn to many future events. 

In April 1937, on the occasion of a visit to the King of the 
Belgians in Brussels, I was able to lay my views before him. He 
asked me to interpret the German conception of the political 
situation. 

“You know, Herr Schacht, that Belgium is vitally interested in 
the return to normal conditions of world trade. Do please tell me 
how, as Germany sees it, the present unfortunate state of affairs 
can be altered,” 

“Your Majesty may be sure that Germany is quite ready to 
come to an international agreement on the limitation of armaments 
on the part of all concerned, as well as on the subject of co- 
operation in a new League of Nations, provided the latter were 
freed from Versailles and from sanctions. But a fundamental of 
any peaceful development is that Germany shall be able to feed 
and provide work for her own people.” 

“Where do you see a chance of that?” 

“Neither politically nor economically can we be dependent on 
the charity or the whims of the other great Powers. The only 
peaceable means I can see of obtaining access to raw materials and 
foodstuffs is for an overseas field of action to be restored to us in 
which we make use of our own resources without let or hindrance.” 

“I appreciate your line of thought, I know full well what the 
Congo means to the welfare of the Belgian people. Have you any 
hope that your proposal may be carried out?” 

"Since I believe, Your Majesty, that the Allies will eventually 
recognize the justice of my idea, I do not give up hope. But the 
dilatory fashion in which this problem is being handled politically 
creates greater difficulties in Germany than in the well-fed coun- 
tries. This naturally tends to aggravate the sense of insecurity.” 

“Have you any specific suggestions?” 

As I did not feel justified in recounting my discussions in Paris 
I replied: 

“Since I am no politician I would prefer not to make any 
specific suggestions. But since, too, the Belgian Government 
enjoys the esteem of its friends and can be sure of their attention 
in the course of its present activity, I should like to hope that 
Belgium would co-operate in solving this problem.” 



382 My First Seventy-Six Years 

The ICing asked me about our relations with Russia. 

“I would ask Your Majesty to consider here also that I am no 
politician and have no mandate from my Government. I can only 
express my personal opinion.” 

“Please do so.” 

“So long as the Russian Government continues its propaganda 
of world revolution we are obviously bound to look upon this 
as a menace to Germany. A highly industrialized country such as 
Germany cannot tolerate Bolshevism under any circumstances. 
Should developments in Russia lead to an abandonment of the 
principle of world revolution, Germany would gladly resume her 
former economic relations with that country.” 

During the whole of our lengthy conversation the King of the 
Belgians was very forthcoming, not only in the sense that he was 
courteous, but in his genuine interest and desire to help in any way 
possible. 

After my talk with the King I visited M. de Man, the Minister 
Finance, whom I had known from earlier days and with whom I 
had been brought into closer contact through my daughter, 
who had studied with him. In view of the important influence of 
de Man during and since that time I append the account which 
I wrote down immediately after my visit. 

“In the course of our conversation de Man described himself 
as half German. He speaks German with the greatest ease and 
was formerly at the Universities of Frankfurt and Heidelberg. In 
theory he is a Socialist, but with a great appreciation of practical 
essentials. The conversation turned, as indeed it does everywhere 
here, on the subject; what can one do to improve the economic 
situation, and in particular to reincorporate Germany in the 
international econonoic scheme of things. For my part I described 
the situation in the usual way and put forward our ideas. De Man 
expressed his full appreciation and stressed his own keen desire to 
improve relations with Germany. On the question of colonies he 
agreed with me. 

“He voiced only one new viewpoint: namely, that in the event 
of a general international settlement from a monetary angle we 
should have to assimilate our currency to those of other countries. 
I replied that however much I was against any kind of inflation, I 
had always made it plain that I was prepared to discuss the assimi- 
lation of German currency to others, but always with the proviso 
that a final system of currency parities should be established which 
could once again serve as a firm basis for international trade. 

“As regards the general feeling in Belgium, de Man emphasized 
that this had completely changed during the last two years. 



Foreign Policy jgj 

especially where Germany was concerned. Nevertheless, one must 
not underestimate the part played by the strong Left-wing antagon- 
ism to all Fascist ideas. The older Liberal groups of former days 
had lost their significance. 

“Co-operation in the Cabinet, particularly between de Man 
and van Zeeland, was on uniform lines. It constituted, so to speak, 
a single force, at the head of which stood the King himself.” 

I have reproduced this report, firstly because it throws a light 
on the international relations prevailing at that time, and secondly 
because it is typical of the direction in which I sought to make use 
of my foreign contacts. By bringing about economic agreement 
I hoped to assist in laying the foundation for a lasting, peaceful 
co-existence between the nations. 

There was a special problem connected with my visit to London 
in December 1938; it was my last visit abroad in an official 
capacity. It had been preceded by the disgraceful destruction of 
the Jewish synagogues on the 9th November 1938, and the fine 
imposed on the Jews of one milliard Reichsmarks. I had made no 
attempt to conceal from Hitler my opinion of this latest barbarism 
staged by Goebbels, and had told him frankly that this kind of 
thing could not go on. 

“If you won’t formulate some legal basis for the Jews in 
Germany by which they can live their lives in decent conditions, 
you must at least allow them facilities for emigration.” 

Hitler himself seemed ill at ease in face of the world-wide 
repercussions aroused by the bestiality of the 9th November. He 
gave me an enquiring look. 

“Have you any suggestions?” 

I unfolded my plan: 

“The whole of the property of Jews in Germany shall be 
brought into a trust company who will administer it according to 
law. This trust company shall be governed by an international 
committee, on which the Jews are dso represented. On the basis 
of this property held in trust by way of security the committee 
will issue a loan in the international market amounting to, say, 
one to one and a half milliard Reichsmarks. This loan carries an 
interest of about five per cent, and is repayable by annual instal- 
ments over a period of twenty to twenty-five years. The German 
Government guarantees the transfer of interests and repayment- 
instalments in dollars so that the loan can be issued as a dollar 
loan. Jews all over the world will be urged to subscribe.” 

“And what is to be done with the dollars?” 

"Out of the dollar proceeds of this loan every Jew wishing to 
emigrate will receive a certain sum which facilitate his 



384 My First Seventy-Six Years 

reception in another country and serve as a foundation on which 
to build a new life,” 

I was well aware that this was not an ideal proposition. But I 
feared that any chance of economic existence for the Jews would 
be completely destroyed by the Party unless something was done 
to prevent it. My suggestion would mean that Jewish property in 
Germany would be preserved intact over a period of years. In the 
meantime many new developments could occur. 

To my great astonishment Hitler declared he had no objection 
to my attempt to put this idea into practice. At my suggestion he 
authorized me to convene a political discussion in London. The 
negotiations took place there from the 14th to the 17th December 
1938 . 1 contacted Lord Bearsted of the firm of Samuel & Samuel, 
who reacted sympathetically to the proposal, while other firms, as 
he informed me, turned it down. There followed a discussion with 
Mr. Rublee, the American and British chairman of the so-called 
Evian Committee, and Lord Winterton, the British Minister, both 
of whom as well as Lord Bearsted were interested in following up 
my plan and in getting to work on those lines. 

But this attempt to relieve the international situation failed also 
when I was dismissed from my office of President of the Reichs- 
bank by Hitler on the 20th January 1939. My official connection 
with London was broken. 



Part Six 


RESISTANCE 



CHAPTER FIFTY-ONE 

I Break with Hitler 

F rom the middle of 1936 onwards my relations with Hitler 
had slowly but steadily deteriorated. My influence on 
his policy had been considerable during the first years — 
especially in the economic field — ^but after the middle of 1936 
it speedily declined. My announcement in March 1937 that he 
could expect no more money from me; the impossibility of ex- 
tending his plans for autarchy to include foodstuffs ; the complete 
exhaustion of the capital market demonstrated by the Reichsbank, 
and my condemnation of his anti-Semitic Party policy; all these 
factors had obviously convinced him that he could no longer count 
on me in the pursuance of his warlike intentions, which he had so 
far managed to conceal. 

Not until the Niirnberg trial did I learn that, as far back as the 
beginning of November 1937, he had confided his military plans 
in strictest secrecy to the chief leaders of the Wehrmacht and to the 
Foreign Minister. As yet, therefore, 1 suspected nothing; I could 
not and would not give up hope of a peaceful outcome. The 
realization that things were otherwise dated from the beginning of 
January 1938. There is no need for me to recapitulate the events 
which have so often been described. Blomberg contracted marriage 
with a lady who obviously did not answer to that description. He 
resigned his position as Minister for War. General von Fritsch, 
Commander-in-Chief of the Army, was maliciously confronted 
with a groundless charge of homosexual practices. 

Count Helldorf, head of the Berlin Police, told me of the 
despicable part played in both instances by the Gestapo under the 
direction of Himmler and Heydrich. At the beginning of the 
National-Socialist movement, Helldorf had taken part in many 
brutalities and excesses; but in the course of years and owing to 
his experiences with the Party he had changed his views and en- 
deavoured to rehabilitate himself by joining decent groups. So my 
friends and I were put wise to all the details concerning Ae affaires 
Blomberg and Fritsch. 

The maimer in which Hitler dealt with both cases, without the 
slightest regard for justice, decency and morality; the fact that he 
assumed command of the Army; dismissed von Neurath from his 



I Break with Hitler 


387 

post as Foreign Minister; sacked several Generals of merit and 
decent outlook and removed several diplomats whom he disliked; 
everything pointed to the conclusion that Hitler was obviously 
bent on war. 

The events connected with Blomberg and Fritsch created a bad 
impression both at home and abroad and resulted in Hitler and 
Goering intensifying and speeding-up the measures leading to the 
Austrian Anschluss. The unprecedented rejoicing over the Anschluss 
in Austria as well as in the old Reich raised Hitler’s popularity to 
a hitherto unattained level and caused the Blomberg and Fritsch 
business to be forgotten. 

Following the march into Vienna, the Reichsbank was faced 
with the task of taldng over the Austrian Bank, thereby incorporat- 
ing the Austrian economy in the German monetary policy. While 
all the other National-Socialist functionaries from Germany 
were at pains to represent the former Austrian economic and 
administrative policy as a glorified hotchpotch of inefficiency, 
I paid tribute to the outstanding work of the Austrian National 
Bank and to the world-wide reputation it had achieved and main- 
tained through the decades. Some hotheads among the personnel 
of the Austrian National Bank attempted to carry out a political 
“cleansing”, but from the very first I categorically reffised to 
countenance their efforts. Not a single member of the staff was 
dismissed after I took over the Bank. Herr Kienbfick, its President, 
was a former Minister of Finance, a clever lawyer and financier. 
It is true that I had to let him go for it was not possible to offer him 
a position of equal rank ; but I saw to it that he was able to retire on 
full pension and with flying colours though he was known to be of 
partly Jewish extraction. 

During a discussion which took place a few days after the march 
into Austria, Hitler announced his intention of raising the market 
value of the Austrian schilling — thitherto reckoned at 50 German 
pfennigs — ^to 66| German pfennigs. Secretary of State Keppler 
had managed to persuade Hitler that this increase in the value of 
the schilling would increase the value of the money in the working 
man’s pockets. He overlooked the fact, however, that the working 
man didn’t have much money in his pockets. He overlooked, too, 
what every student of political economy learns in his first term, 
that an automatic rise in prices is bound immediately to cancel 
out any artificial overvaluation of money. Apart from the fact that 
such a measure only served completely to upset the balance of 
the Austrian economy, the only people; who profited by the higher 
valuation of the schilling were those wiih fixed-inter^-bearing 
securities, i.e. bonds and mortgages, who now received larger 



388 My First Seventy-Six Years 

amounts in interest and amortization. That capitalist circles would 
be the very ones to profit by this measure was something Messrs. 
Keppler and Hitler had not thought of. 

In vain I put forward my views, which were diametrically 
opposed to this policy. Being imable to malte any impression I 
ended by telling Hitler : 

“You have among your colleagues an expert on currency matters, 
considered by the whole world to be an authority on the subject — 
and you succeed in completely ignoring this man’s advice.” 

The reply was : 

“I do so for political reasons.” 

If, nowadays. Party-political bias seeks to gloss over or to 
minimize the historical fact of the Austrians’ overwhelming unani- 
mous rejoicing over the Anschluss with the Reich, I want, by way 
of refutation, to bear witness to what I saw with my own eyes 
and experienced through personal contact. Not only was I in 
Vienna for days on end : I travelled all over the Austria of that time 
and talked with people in all walks of life in the capitals of Austrian 
Federated Provinces, Nowhere did I come across any other reac- 
tion save that of relief, and the hope that they had at last emerged 
from all economic and national straits. 

I shared in this rejoicing with all my heart, but it was not 
sufidcient to allay my misgivings arising from the Blomberg- 
Fritsch events. As the result of serious and anxious consideration 
I was forced to the conclusion that a continuation of the Hitler 
regime must imperil to the last degree the relations of our country 
and our people with other nations. 

Together with my friends, I began to deliberate how best to 
overthrow the Hitler regime. Following the Fritsch affair I had 
approached von Brauchitsch, the new Commander-in-Chief of 
the Army. I had sought out von Rundstedt, the head of the 
Wehrmacht detachment in Berlin. I had a long talk with Admiral 
Raeder. Finally I went to Giirtner, the Minister of Justice. With 
all of them I ^scussed the danger that threatened and implored 
them to take counter-measures against Hitler from the vantage 
point of their military and official positions. Everywhere I encoun- 
tered deaf ears. Not one of these high dignitaries was prepared to 
take a stand on behalf of right and justice. 

Every month I went to Basle for the meeting of the Bank 
for International Settlements, and there I had the opportunity 
of regular contact with my colleagues on the board of directors 
and other bankers from the Western countries. Despite the 
reserve arising from the national ties of each one of us, we 
nevertheless exchanged a good many comments during ffiese 



I Break with Hitler 389 

conversations, which left no doubt as to the reaction to the 
political atmosphere. 

The more conditions in Germany approached a climax the 
greater my desire to make use of my connections in Basle as a 
means of preserving peace. In the course of the summer, therefore, 
I asked my British colleague, Montagu Norman, whether it would 
not be possible to bring British policy more into line with my 
efforts to maintain peace. Hitherto, Britain’s policy had appeared 
to be to leave Hitler a free hand in foreign affairs. When I met 
Norman again four weeks later he said: 

“I discussed your suggestion with Neville Chamberlain.” 

“And what was his reply?” 

“His reply was : ‘Who is Schacht? I have to deal with Hitler.’ ” 

This answer caused me considerable astonishment. It seemed to 
me incomprehensible that the British Prime Minister should set 
so little store by maintaining a certain contact with those circles 
which were ranged on the side of peace. 

Slowly the conviction grew in me that only a bold stroke could 
put an end to the Hitler regime, since the attempt to guide it in the 
right direction by means of open resistance on the part of respons- 
ible generals and ministers had proved fruitless. Then a chance 
remark brought me into touch with General von Witzleben. In 
him I found a determined opponent of the regime. I succeeded in 
convincing him that an international military conflict was unavoid- 
able with Hitler at the helm, that only by violent action could the 
regime be brought to an end. 

The following months were taken up with our preparations for 
a coup d’kat. The ^vision commanded by the Potsdam General 
Brockdorf-Ahlefeld had been initiated into our plot. With their 
aid and that of Panzer forces promised by General Haider — who 
had succeeded General Beck, Chief of Staff, on the latter’s retire- 
ment — ^Hitler and his immediate assistants were to be seized and 
brought before a State Tribunal during the last days of September 
1938. 

First and foremost we discussed our plans with General Beck 
who, because of his suspicions of Hitler’s warlike intentions, had 
tendered his resignation as Chief of the General Staff in the 
summer of 1938. Beck was a man of absolutely sterling character, 
highly cultured and possessing a great store of knowedge, not only 
of his own subject but over a very wide field. As Chief of the 
General Staff he enjoyed the complete confidence of the Army 
and was the acknowledged moral leader of the Staff. Nevei^eless, 
Beck was more of a scholar than a man of action. His retirement 
accelerated the moral disintegration of the General Staff. His 



390 My First Seventy-Six Years 

departure deprived the higher military ranks of their only strong 
counter-element against Hitler. 

It proved impossible to carry out the proposed coup d'etat 
owing to the Munich Conference which led to the temporary 
solution of the burning Czech question, 

I have recounted the events of this month in so far as I took 
any part in them, in my book Settlement with Hitler (Rowohlt- 
Verlag, Hamburg, 1948). I will content myself therefore with the 
following summing-up : 

Although from now on I went in constant peril of my life, I 
could not bring myself entirely to conceal my antagonistic attitude. 
It is true that I resorted to camouflage when necessary, as I had 
already done on previous occasions. Later, during the denazifica- 
tion proceedings, I was blamed for tliis camouflage. The American 
Chief Prosecutor went so far as to expostulate that there was 
nothing in my actions which had given them a clue as to my 
intention to remove Hitler. I replied that I couldn’t possibly have 
advertised it in the newspapers beforehand. Anyone who did not 
understand the art of camouflage encompassed his own death 
and that of others as well. I had no wish to perish on Hitler’s 
account; rather, I desired to live for the sake of my people. That 
I set no store on living for my own salce I proved by the fact 
that for seven years I rendered myself liable to the charge of high 
treason. 

It would have been easy for me not to return to Germany after 
my Indian visit. When I went for my honeymoon to Switzerland in 
1941 I could have remained there without any further trouble. On 
both occasions I went back to Germany, for I did not wish to 
escape the fate that threatened my people. With the connivance of 
more than half a dozen persons I had played a leading part in 
preparations for a military revolt against Hitler. The slightest 
intocretion, whether accidental or deliberate, would have cost 
me my head. For seven long years I lived under the shadow of 
this perpetual menace without for one moment relinquishing my 
intention — ^to prevent the war, to stop the war, to eliminate Hitler. 

There are occasions in men’s lives when a gesture proves more 
revealing than words. At the end of November 1938, Hitler 
opened an Architectural Exhibition at the House of German Art 
and made a speech to a large audience, in which he dwelt on the 
fact that German architecture in the past had ignored the great 
and the massive. He referred to the cathedr^ in Berlin, the 
city’s largest church, which had been built for a congregation 
of only two thousand five hundred. Berlin, with its four million 



J Break with Hitler 


391 

inhabitants, should have built a cathedral capable of holding a 
hundred thousand. 

One could have told Hitler that he had no conception of the 
spirit and character of a local church congregation, which expresses 
itself in a close communion of its members, not in mass meetings. 
One could likewise have told him what he should have realized 
for himself, that at the time the cathedral was built the installation 
of loudspeakers was as yet unlcnown. Even a preacher with a voice 
as powerful as Hitler’s could not have reached the ears of a hundred 
thousand persona simultaneously. 

I sat in the second row immediately opposite Hitler, who stood 
at the speaker’s table. The entire audience clapped and applauded 
like mad when he spoke. I ostentatiously crossed my arms and 
looked Hitler straight in the face. He caught my look and was 
visibly discomfited. 

Every Christmas the Reichsbank gave a party for the office boys 
which the President of the Bank regularly attended and at which 
he gave an address. For years p^t the National-Sodalists had done 
their best — ^not, of course, without success — ^to snaffle the Reichs- 
bank office boys for the Party and instruct them in the so-called 
National-Socialist philosophy. Once before I had urged these 
young lads not to keep Christmas only in secular fashion but to 
remember that for us the Christmas celebrations were the off- 
spring of the thousand-year-old happy union of Christian faith 
and German character on which our entire civilization was founded. 
In my address to these young fellows at this Christmas party of 
1938 I referred to the events of the 9th November : 

“The deliberate burning of Jewish synagogues, the destruction 
and looting of Jewish businesses and the ill-treatment of Jewish 
citizens was such a wanton and outrageous undertaking as to make 
every decent German blush for shame. I hope none among you 
had any share in these goings-on. If any one of you did take part 
I advise him to get out of the Reichsbank as quickly as possible. 
We have no room in the Reichsbank for people who do not respect 
the life, the property and the convictions of others. The Reichs- 
bank is founded on good will and good faith.” 

Several Party pundits were present during this speech. 

The last meeting of the Cabinet had been held on the 4th 
February 1938, and there had never been another. Its sole feature 
had consisted of the information that General von Fritsch had 
been charged with criminal offences of which Hitler could give 
no details at that time. There was no debate. 

A previous Cabinet meeting in December 1937 had dealt with 
the penal code, in which was drawn up the legal idea of what 



392 My First Seventy-Six Years 

constituted sound public opinion, which was later to be made use 
of in assessing a person’s guilt. As the only member of the Cabinet 
present I spoke up : 

“If, Chancellor, you propose to make use of this sound public 
opinion as a decisive factor for decisions in court, I would suggest 
that a committee be appointed consisting of competent members 
from all parts of the German Reich who would determine what 
sound public opinion is ; for it can differ greatly. In some parts of 
the country, for instance, it is quite in accordance with popular 
opinion for a prospective husband to satisfy himself as to his future 
wife’s reproductive capacity before he marries her. In other parts 
of Germany pre-nuptial intercourse is not in any sense favoured 
by public opinion.’’ 

Strangely enough. Hitler agreed with this remark. “You may 
be right. Perhaps we might consider the appointment of such a 
committee.” 

The Reichsbank Memorandum, in which we had demanded 
the stoppage of excessive expenditure on armaments, was handed 
to Hitler on the yth January 1939, without our having sub- 
sequently heard anything as to the result. The one piece of in- 
formation conveyed to us by some minor officials was that, 
when he saw the eight signatures. Hitler had exclaimed: “That 
is mutiny 1’’ 

Hitler had always tried to prevent his Ministers or other 
colleagues getting together in groups to discuss public events. 
Later he issued a written notice in which he expressly stated that 
imder no circumstances were his Ministers to meet together for 
mutual discussion. He was afraid — ^if not of conspiracies, at any 
rate of general opposition. The eight signatures to the Reichsbank 
Memorandum only served to irritate him still further. 

On the 19th January 1939 , 1 returned home very late and found 
a whole heap of telephone and telegraphic messages bidding me 
come to the Chancellery punctually at nine o’clock the following 
morning. Next day the appointment was postponed by telephone 
till nine-fifteen. Scarcely had I entered the big drawing-room 
looking out on to the garden of the old Chancellery when the 
Puhrer came in and the following conversation took place : 

“I sent for you, Herr Schacht, to hand you the written notice of 
dismissal from the office of President of the Reichsbank.” 

He handed me the document. I held it in my hand in silence 
without looking at it. 

“You don’t fit in to the general National-Socialist scheme of 
things.” 



7 Break with Hitler 


393 


I remained silent. There was a brief pause, 

“You have refused to allow your staff to submit to political 
scrutiny by the Party.” 

I remained silent. Another brief pause. Increasing irritation on 
Hitler’s part. 

“You have criticised and condemned the events of the 9 th 
November to your employees.” 

I had not replied to Hitler’s earlier words, since I entirely 
agreed with his remark that I did not fit into the Party scheme of 
things. As a result I had repeatedly informed Hitler — and had 
supported my contention — ^that I would not allow my staff to sub- 
mit to criticism by the Party. If I were entrusted with a job, I 
explained, I would have to choose my own colleagues for that job. 

I did not consider it necessary to go over the same ground again. 
But after Hitler’s reference to my office boys’ Christmas party I 
replied, with all the sarcasm I could muster: 

“Had I known, mein Fuhrei\ that you approved of those events, 
I should have said nothing.” 

Hitler was obviously at a loss. With an effort he said: 

“lam too upset to continue this conversation.” 

“I can always come back when you have grown calmer.” 

“And what you think will happen, Herr Schacht, won't happen. 
There will be no inflation.” 

“That would be a very good thing, mein FiikrerF 

Without another word he accompanied me through two other 
rooms to the front door, and I took my leave. 

Dining the course of the day Hitler must have thought over how 
to explain my departure from the Reichsbank to the public. As I 
learnt from the Chancellery, a farewell communication, couched 
in very stiff terms, was considerably modified and even expressed 
the hope that Hitler might continue to avail himself of my counsel. 
As a result of these second thoughts I did not receive a notice of 
dismissal from the post of Minister without Portfolio. 

In the days immediately following I moved from my official 
residence in the Reichsbank to a house for one family only which 
was my own property in Charlottenburg, and gave this as my 
official address in connection with the duties of a Minister without 
Portfolio. This meant that I waived all claim to official “appear- 
ance,” nor was I ever again called upon to act in my ministerial 
capacity. 

Simultaneously with myself, Hitler also dismissed two of my 
colleagues who had been conspicuous in previous negotiations 
with the Ministry of Finance. 'They were Vice-President Dreyse 
and a member of the board, Hiilse by name. Of the other five 



394 Seventy-Six Years 

members, Vocke, Ehrhardt and Blessing tendered their resigna- 
tions from the board of the Reichsbank, which were accepted 
after some considerable unpleasantness. Puhl and Kretzschmann, 
the last two, remained in office. Unlike the rest of us they had long 
since succumbed to Party pressure. We six had never sided with 
the Party. 



CHAPTER FIFTY-TWO 


Indian Diary, igjg 

M y attempt at a coup d’Stat in September 1938, my refusal 
to grant further loans to Hitler and my dismissal on the 
20th January 1939 made me want to withdraw for a time 
from the searchlight of public life. More than half a dozen people 
knew of my attempted coup d'itat, which intensified the risk of 
an unforeseen indiscretion. My definite repudiation of further 
armaments could only lead to increased tension between Hitler 
and myself. A prolonged absence from Germany would enable the 
events of the past months to be to some extent forgotten, so far as 
I personally was concerned. 

I therefore wrote to Hitler that I wanted to embark on a long 
spell of foreign travel. Hitler agreed. It must have been a relief to 
him to know that I should be absent from the political scene. 

In accordance with correct procedure I called on Herr von 
Ribbentrop, the Foreign Minister, to acquaint him of my proposed 
journey. Ribbentrop greeted me with the words: 

“You want to make a trip round the world?” 

“Not a trip round the world, Herr von Ribbentrop ; I only want 
to go to East Asia and visit China and Japan.” 

“But surely you know, Herr Schacht, that we have a close 
alliance with Japan, whereas our relations with China have become 
very shaky. For political reasons I cannot possibly approve of your 
travelling to East Asia.” 

“But, Herr Ribbentrop, we haven’t broken off diplomatic 
relations with China; I can see no reason why I shouldn’t visit 
both countries. After all. I’m going as an ordinary tourist and not 
on any political mission.” 1 

“That has nothing to do with this particular case, I regret that 
I am unable to approve your journey.” 

“If that is so I will only go as far as the Dutch East Indies.” 
“Unfortunately that too is impossible, The Dutcli East Indies 
are much too close to East Asia and you might not be able to avoid 
contact of some sort with East Asian politicians,” 

I was beginning to lose patience, but didn’t want matters to 
develop into a heated argument, and replied: 

“Very well, then. I wiH restrict my journey to British India,” 



396 My First Seventy- Six Years 

“That won’t do either. If you go to British India the public will 
assume that you will be extending your trip as far as East Asia.” 

That was too much of a good thing. “Well, Herr Ribbentrop, 
I expect it’ll boil down to a short trip to the Harz Mountains”, 
I said as I left the room. 

Naturally I refused to be put off by this line of reasoning, and 
finally managed matters in such a way that no further objections 
to my journey to India were raised by the Foreign Office. 

For the first time in my life I kept a diary of my travels. On my 
return to Germany I left it in the care of friends in Switzerland, 
as it contained so many disparaging remarks on the Hitler rdgime 
that I had to make quite sure it was safe from any possible inter- 
ception. For this very reason, however, I find it particularly 
valuable in writing these recollections. I am only sorry that I was 
unable to produce it at the Niimbcrg trial. I did not receive the 
manuscript back until 1951. 

The following are some extracts from this diary; 

Once again I have cut loose. I have done so because by no other 
means could I have broken free from the fetters which the loss of 
the war had forged for us. There was no filing through these 
fetters save by sacrificing one’s strength; the only way was to burst 
them, and I deliberately and frankly helped to do so. But the main 
thing afterwards was to take our place once more and work on 
positive lines within the international framework. 

The world has grown too small for us to elevate war to the level 
of a principle. Nations will have to learn how to get on with one 
another. The earth is still big enough to allow all nations room to 
live. 

The difference in our fundamental outlook separates me from 
those elements which believe that by the destruction and oppres- 
sion of other European nations they will be able to achieve freedom 
to expand. Brutality as a principle, mendacity as a tenet, perfidy 
as a permanent institution, etc., can never succeed because, in 
the history of nations as in the lives of individuals, there is a 
moral law which cannot be broken with impunity. If the dictated 
Treaty of Versailles failed to endure, it was because of its unethical 
foundation. Neither will our present unethical conditions endure. 

Ephemeral success has no power to fool me. And I would rather 
keep my character than go down to history as a kind of demi- 
god. So for the time being I retire from the game. Perhaps there 
will be another chance for me one day. If so it will be an act of 
grace; if not I shall take comfort from Goethe’s words; “We can 
lose everything if we remain true to ourselves.” 



Indian Diary ^ 1939 397 

Mussolini’s Italy. The disparity between the will and the deed 
is apparent in every aspect of daily life. Every street scene testifies 
to cruel poverty. The big, smart hotels are empty, staff and manage- 
ment indifferent and disgruntled. The more exacting, albeit more 
responsible inhabitants of Northern Italy are slowly succumbing 
to the advance of the pauperistic element of the South. A meal, 
consisting of spaghetti, in an ordinary middle-class eating-house 
in Naples costs 20 pfennig — equal to German postage on a letter 
abroad. 

There are no fewer than eight hundred Jew's on board, most of 
them from Austria, nearly all bound for Shanghai because they 
can disembark there without let or hindrance. For most of them 
the days on the boat are the last remaining reminders of better 
times. From the saloon come the sounds of Wien, Wien, nur du 
aUein . . . (Vienna, Vienna, there’s nowhere like you . . . ). 

The Duchess of Aosta came on board at Naples. She is the wife 
of the famous airman who has taken over the job of developing 
Italian Ethiopia. She is impressive to look at, with great dignity and 
charm and is related or connected by marriage with half the world’s 
royal families. Her father is the Bourbon Pretender to the Throne 
in France; he was formerly a Danish officer and lives in exile in 
Brussels. Again and again in conversation one is conscious of the 
influence wielded by Ore ruling royal families. To block all these 
channels, as German Governments have done since the fall of the 
Monarchy, is the most amazing stupidity. 

It’s amusing how careful this “royal lady’’ is to see that nothing 
in the conversation can harm her husband. The members of her 
entourage are much more outspoken . The Duchess is surprised at my 
frankness when I proceed to demonstrate that a system of govern- 
ment which depends on one person alone cannot hope to last, or when 
I quote Montesquieu in defence of striking a balance among the 
different powers within the State. All power needs to be controlled. 

The new buildings in Genoa and Naples show frustrated effort 
to evolve a new style which strives to create a heroic impres- 
sion. In my opinion it has failed completely. The really heroic is 
never blatant. I miss Winkelmann's “noble simplicity and quiet 
greatness’’ (edle Einfah tmd stille Grosse). 

Anyone entering the Suez Canal must be impressed by the 
many petroleum tanks that, line the entrance to the Canal on both 
sides. I counted over thirty of them, each as big as a city gasometer. 
The part played by oil in modem transport is brought home to one 



398 My First Seventy-Six Years 

here in striking fashion. Owing to motorization, especially of 
engines of war, the adequate supply of oil assumes a particularly 
grave significance. A foreign policy which fails to take this factor 
sufiiciently into account will be continually faced with almost 
insuperable obstacles. 

Massawa. Obviously a colony that is not really a colony. Rock 
and sand along the coast and up in the hinterland. A garrison, but 
no place for industry, farming or trade. The entire region depends 
on support from the mother country. 

Aden is quite different. Aden is the centre of trade for the whole 
of Southern Arabia. Exports are on a grand scale : hides, millet, 
sesame, coffee, resin. Besides this, Aden is a vast emporium for oil- 
fuel, most of which comes from Persia. Over a million tons of oil 
per annum are delivered to ships in transit and pumped direct into 
the ships’ bunkers from floating conduits. The tanks, of which the 
moat recent are no longer constructed of thin steel plate but are 
underground, hewn out of the solid rock, contain a permanent 
store of a further million tons. 

I paid a courtesy visit to the British Governor but avoided all 
political conversation . I was soon on excellent terms with the owner 
of the French firm of Besse, the largest commercial house in Aden, 
established there for over twenty years. The firm of A. Besse is a 
model of international economic outlook. It represents other firms 
of the most vudely different nations and buys and sells in many of 
the world’s markets. 

The Italians tried to purchase the organization maintained by the 
firm in Abyssinia. But the owner sticks to his job and is conscious 
of his responsibility towards the population with whom and for 
whom he runs his business. Though what does such an individual 
humane sense of responsibility amount to in a political machine, 
compelled to operate according to the will of a dictator? Shall we 
ever penetrate the secret of the British Empire, where the indepen- 
dent responsibility of each is continually brought into play and 
intensified for the attainment of the common goal? One can grow 
weary of ruling over slaves, but to unite responsible beings of 
independent action in a common task is worthy of the best efforts 
of the highest in the land. 

Four enchantingly peaceful days bring us to Bombay. The 
British local Press immediately suspect me of being a Hitler agent, 
in spite of which I am invited to lunch by the Governor. My 
Indian friends have arranged for me to meet many industrialists, 
business-men and high officials. And of course I shall call on the 



Indian Diary, J939 ^99 

heads of the big British banks. Also, I must devote some time’to 
the German colony, which consists entirely of first-rate people. 
Unfortunately the National-Socialist Party manages to create a lot 
of unrest and discord, especially through the Deutsche Arbeitsfront. 

Bombay is the usual hybrid city. The Hindus, colourful like all 
Orientals, make the few Europeans appear insignificant. Houses, 
streets, station, port, automobiles, all proclaim Europe. On the 
same street one sees cars, ox-carts and camels. Goods worth hun- 
dreds of thousands in small booths belonging to jewellers or silk- 
merchants. Sheltering alleys and quiet corners. Cows, regarded as 
sacred, occasionally hold up the traffic on the busy streets. 

The vegetation takes my breath away. Unfortunately our 
countrymen here know little of the flora and fauna. Baedeker and 
Murray, too, let me down. On the Island of Elephanta, with its 
rocky temple, the ground at one spot was covered with tiny fallen 
blossoms. 

“What are these curious blossoms ?” I enquired of a companion. 

“They come from the tree just above us.” 

“Can’t be”, as Grock would say. 

Saturday, 15th April, in the electrically-air-cooled train to 
Agra, where we arrive after a run of twenty-two hours. The 
countryside is only sparsely cultivated. Thin shrubs and bushes 
and single trees. From the train we could see monkeys, peacocks, 
parrots, gazelles, birds of prey. The hotel at Agra is a one-storey, 
spacious building, Lofty rooms with colonnades to keep out light 
and heat. Lizards run up the walls catching flies and mosquitoes. 

The miracle of Agra is the Taj Mahal, to my knowledge and in 
my opinion the most beautiful building in the world. Its history is 
well known: it was erected as a sepulchre for a beloved wife. 
Immediately facing it, on the opposite bank of the river, the 
widowed Grand Mogul meant to build an identical tomb for him- 
self, but in black marble; whereas the Taj Mahal gleams dazzling 
white in the sun. But fate intervened in the shape of a practically- 
noinded son who deposed his father on grounds of extravagance. 
The father spent the last seven years of bis life under strict guard 
in a secluded palace, gazing at tihe distant Taj Mahal reflected in 
one of the stones of his castle. The lonely man imparted wisdom 
to the boys of his entourage — the ultimate wisdom, such as Faust 
also teaches : “My fairest moments are spent in anticipation of the 
bliss to come.” 

Every day the papers print disquieting news from home. In the 
face of all Hitler's apparent politi^ successes it is not easy to hold 



400 My First Seventy-Six Years 

to the belief in the righteousness of my own convictions. But I 
have been through the same kind of thing once before, and have 
stuck to my guns and proved right in the end. To an ageing man 
the anxious question presents itself: will you be young enough 
once again to lend a helping hand? From what I gather today, 
Funk’s speech to the Central Committee of the Reichsbank is 
sheer inflationary policy. 

In Delhi the style of the fortress of Fatehpur-Silcri at Agra is 
repeated in magnificent fashion. The Palace of the Moguls is a 
thing of unbelievable beauty with its architecture, marble filigree 
and inlaid work. New Delhi, the residence of the Viceroy, presents 
its own particular problem. Huge modern buildings, huge squares, 
immensely wide streets in a completely new and still very empty 
city area. A mixture of styles — ^Mogul, Victorian and Modern. In 
the Hindu quarters of Old Delhi there is the maze of narrow alleys 
with its incredible filth, swarming with people, but with some 
fine remains of ancient architecture and an exquisite little primitive 
mosque. To realize the idea of mankind in the mass one must have 
seen this teeming multitude of adults, old people, babies and 
children. And in the midst of it aU the vast gleaming mosque of the 
Moguls with a red hair from the beard of the Prophet. 

Jaipur, the rose-coloured city, laid out on rectangular lines two 
hundred years ago. The whole town surrounded by high walls. 
The twenty-six-year-old polo-playing Rajah with a stable of a 
hundred and twenty polo ponies. In one part of the Palace an 
orchestra of about ten players who perform the whole day long, 
among them an old man of ninety-five who has held this same job 
in this same spot since he was fifteen. 

The street scene in the Bazaar is vastly entertaining. The 
women mostly in red and orange, the men with turbans in all 
colours. Throughout the day there were wedding processions, 
bride and bridegroom aged from ten to twelve years, mounted on 
horses or elephants according to their financial circumstances. 
Part of one street was spread half-way with rush mats on which 
some himdred wedding guests squatted in two rows facing each 
other. A cook perambulated the rows and ladled out to each 
person a portion of the wedding feast. 

Two days later and we are in Lahore, capital of the Punjab, 
the granary of India. That this is so is due to the system of irriga- 
tion laid down by the British. The Lahore Museum gives a good 
picture of the way in which sculpture developed, especially of that 



Indian Diary, jpjp 401 

period when Greek art among Alexander’s followers absorbed 
Buddhism. Statues of Buddha in classical Greek garb. Lovely old 
carpets, beautiful ivories, miniatures in Persian style, a wealth of 
gold coins dating from the Mogul period. 

On, next morning, to the Sikh town of Amritsar. The golden 
Temple, set in the middle of a lake, is most impressive. Fish swim 
in this lake, the faithful bathe in it and drink the water. Inside the 
Temple, the Sacred Book of Sikh Doctrine is read aloud without 
interruption from morning till night. Eight persons read in succes- 
sion, each one for an hour, and the reading must be completed in 
forty-eight hours. Then it starts all over again from the begimiing. 
the Temple is always full of crowds perpetually coming and going. 
We left, garlanded with jasmine. 

To Peshawar the following day in two cars, across a fertile plain 
stretching interminably ahead. Peshawar is the seat of government 
of the North-West Province, the frontier defence against Afghan- 
istan. Many columns and similar memorials record the names of 
British frontier battles. A trip over the Khyber Pass to the Afghan 
frontier made it plain to us that the whole of Afghanistan’s traffic 
is directed towards India. Kabul is under two hundred miles from 
Peshawar. The road is so much used by caravans that it was obvious 
why the British motor road is separate from the camel track. 

One has to see all this in order to realize the tremendous contri- 
bution to civilization that Britain is making here without any fuss 
or flourish of trumpets. Anyone who thinks that the British nation 
is decadent should come out here. 

Via Rawalpindi and a six-thousand-foot pass to the wonderland 
of Kashmir. The valley, some five thousand feet up and with a 
marvellous climate, is extraordinarily fertile. Unfortunately it is 
completely cut off from its surroundings so far as traffic is con- 
cerned. There are only two passes into the country situated among 
the spurs of the mountain-range — one from Rawalpindi, the other 
to the South by way of Jammu. 

In the home of Major Hadlow, an Englishman whose family 
have carried on a carpet manufacturing business in Srinagar for 
fifty-four years, we meet the American mountaineering party who 
disembarked from the same boat in Bombay and are now on their 
way to Kz, twenty-eight thousand feet up. 

The return journey, takes us over the Balham Pass to Lahore, 
where Professor Bathnagar gives a tea-party in our honour, attended 



402 My First Seventy-Six Years 

by about fifty Hindus — business-men, politicians, scientists and 
officials — and several British officials as well. I have to face up to a 
regular cross-fire in which each questioner is checked and corrected 
by his neighbour. Four opinions to every three Hindus; we are 
very much alike in this respect. 

8 th May. To Simla, the summer residence of the Viceroy, the 
Earl of Linlithgow. A very friendly reception. It’s like staying in a 
big country house in East Prussia. Meals are talcen in common and 
the company remain together after dinner in the evening. Other- 
wise everyone does what they like. Every evening the viceregal 
band gives a truly dreadful concert. In answer to an enquiry 
by my neighbour I find it is only with difficulty that I recognize 
“Walter’s Prize Song.” But the British enjoy it very much. 

On the second evening a colour-film was shown which the 
viceregal family had recently taken during a tiger-hunt in Nepal. 
More than a hundred elephants, and in the case of one drive, no 
fewer than four tigers. 

When I left I received an invitation to Linlithgow in Scotland. 

In a dusty night train to Benares, the Holy City on the banks of 
the Ganges. Had Heinrich Heine ever been there he certainly would 
never have written his poem. The filth and stench would be too 
much for even the most vivid poetic imagination. At the famous 
Ghats, where — all over the town — about eighty flights of steps 
lead down between the houses to the river, one can recognize the 
sites of tlte funeral pyres by the remains of dead ashes and the 
freshly-piled faggots. The dead are borne through the narrow 
streets on stretchers, the sick are treated with magic remedies by 
quack priests. Cows void their excrement in the middle of the 
temple courtyards; the ragged beggars, the sick and the deformed 
make a tour of the city a penance. 

Calcutta. No Indian city, but to all outward appearance the 
most European of our tour. The weather is hot, for the first time 
unpleasantly so on account of the excessively damp air. And the 
contact with the German colony is less friendly than in other 
places. Here too the curse of the Party makes itself felt. Everybody 
is afraid of being denounced. There are few sights worth seeing. 
British statues everywhere. The Victoria Memorial building is 
passable, in contrast to the new Government House in New 
Delhi which is a mass of columns and niches with no interior tq 
speak of. The Botanical Gardens are attractive, and their giant 
banyan tree with its hundreds of aerial roots. A visit to the Temple 



Indian Diary, ipjg 403 

of Kali affords an unpleasing insight into dirt, sickness and 
superstition. 

Five hours by ’plane brings us to Rangoon, the capital of Burma ; 
throughout the second half of the flight we struck a regular 
monsoon gale. On the east side of the Gulf of Bengal the monsoon 
arrives four weeks earlier than on the west side. 

Now we find ourselves in another world. The Burmese is a com- 
plete contrast to the Hindu, with whom he is often engaged in 
bloody conflict. He is cheerful, lighthearted, high-spirited but 
also quick-tempered. Buddhism, not Hinduism, is the prevailing 
religion. The whole country is fertile, a regular rice-swamp. 
Industrial output is confined to tealt, petroleum and tin. 

Before the First World War much of the trade was in German 
hands. The German Club set the fashion. Today there are eight 
or ten Germans in official positions. That is all. 

In Burma are to be found the first pagoda-shaped Temples. 
The links with Siam and the Chinese Orient are noticeable. 

The rains make the high temperature more bearable, but the 
plague of insects, which exists scarcely at all in dry weather, has 
set in. The rains last six months and ruin all wooden furniture, 
clothes and leather goods. The beds are damp and clammy. Char- 
coal fires must always be kept burning for the sake of anything 
one wishes to keep dry. 

In the hotel we met EJIi Beinhorn, the airwoman, now flying 
round the world alone in her little monoplane. She had to land 
in the monsoon rains in a rice-field. Plucky woman. 

A spruce little steamer is to take us back to Madras on the 
Indian coast. In the British captain and his officers we get to know 
something of the uniform, tedious lot of these British pioneers who 
wage lifelong war against innate obtuseness, filth, heat, vermin, 
nutritional diseases, etc., yet are always conscious of being part of 
the British World-Empire, which is more firmly rooted in their 
being than we in Germany realize. There is such a thing as a British 
philosophy {WeltanschauuT^)’. self-respect and self-control. I wish 
we too had reached that stage. 

The usual reception on the landing-stage at Madras. Hundreds 
of coolies and half a dozen white-clad, topee’d Europeans. The 
programme starts with a big tea-party at Mr, Rajam’s, Almost all 
Hindus, and us Germans. A precocious nine-year-old child per- 
forms a long religious dance. The men and the European women 
sit on chairs, file Hindu women squat on the floor. A wealthy house. 



404 Seventy-Six Years 

Tea is served in the garden at little tables, close to fountains lit by 
electricity as soon as it begins to grow dusk. A leading member of 
Congress makes a speech. I was given the customary garland by 
way of welcome. Obliged to reply. My first speech of the whole tour 
which finds its way into the Press. It arouses many comments in 
the newspapers. The London Times writes: “Schacht’s speech — 
clever diplomatic statement — created a considerable impression 
on a mixed audience.” 

From Madras we make the usual trip to the ruins of the ‘ ‘ Seven 
Pagodas” Hindu Temple. On the way we pass through villages, 
colourful examples of national life, religious feasts, annual fairs, 
sorcery, series of duels, in which sticks take the place of swords. 
The “Seven Pagodas” are hewn entirely from the living rock. So 
are the sacred beasts between each — an elephant, a bull couchant, 
all are larger than life and executed with the utmost perfection. 
A rocky wall decorated with gigantic reliefs — ^hundreds of animal 
and human figures from an old sacred legend. 

The guest of the Maharajah of Mysore, who is celebrating his 
birthday. Mysore is reckoned the most progressive State in the 
whole of India. The work on reservoirs and irrigation is especially 
typical. In Bangalore there is a small German colony. The loveliest 
city we have seen in India. Green paries, wide asphalted streets, fine 
villas, attractive shops. The Prime Minister of the country, Sir 
Mirza Ismail, lives in Bangalore; it is to him I owe the invitation 
to Mysore. 

In Mysore we stay in the Government guest-house. The 
extensive city gai'dens owe their origin to Herr Krummbiegel, 
now over seventy years old. He is a native of Kdtschenbroda and 
speaks in exactly the same Saxon dialect that he used decades ago. 
The fifty-six-year-old Rajah suffers unfortunately from diabetes. 
His birthday celebrations begin on the 29th May with a great 
Indian Durbar in the palace. The Durbar Hall is on the first floor 
and is open the entire side which looks down on the square in front 
of the palace, so that the crowd outside can see and share in the 
ceremony. Several hundred dignitaries from towns and villages 
throughout the province — officers, ministers and priests — gather 
in the Durbar Hall in magnificently coloured ceremonial attire. 
Preceded and followed by his numerous court, the Maharajah, 
with two of his kinsfolk, enters and takes his place on the throne 
facing the people. Temple dancing-girls dance and sing to the 
accompaniment of sacred music. Deputations from the province 
approach the throne, bow and offer rice as a symbolic gift. Priests 
pray and offer sacrifices, uttering praise and prayer. Otherwise not 



Indian Diary, igsg 405 

a sound, not a word. Everything is done with the greatest di gn ity 
and unparalleled magnificence. The ladies of the court watch the 
ceremony from behind a wooden grille, and we Europeans from an 
open gallery. 

In the afternoon there is a gigantic procession through the city, 
in the centre of which the Rajah drives. Soldiers, dignitaries, 
horses, dromedaries, painted elephants, coaches and horsemen 
follow. All Mysoi’e is on its feet watching the procession. Every- 
thing is like an Indian fairy-tale as we used to picture it in our 
childhood. 

Darkness provides an unusual effect. On this evening and on 
seven subsequent evenings the whole vast palace, its wings and 
gateways are ablaze with electric lights that outline even the smallest 
contours of the fafade. And above the city the Maharajah’s summer 
residence also shines with a similar radiance throughout the night. 
The entire road leading up to it is marked by chains of electric 
lights that stand out from the dark mountain-side. 

Through the luxuriant loveliness of trees and plants of the 
Nilgiris we go on to Madura, the site of the most majestic and 
spacious example of Hindu temple architecture. My enjoyment of 
this colossal monument is somewhat marred by the fact that a 
regular bazaar is accommodated in the outer halls of the temple. 
The Bible story of Christ driving the money-changers from the 
Temple is suddenly brought home. In the holy of holies a brown 
lad pressed souvenirs upon me. Genuinely embarrassed and 
uncomfortable I thimdered at him: “I don’t want to do business 
here, this is holy ground.” 

Our guide looked reproachfully at the boy. 

“There now! you see!” Then he spat — a large blob— on to the 
holy ground. 



CHAPTER FIFTY-THREE 


From an Attempted Coup d^Etat to an 
Attempted Assassination 

M y Indian journey had given me a very impressive picture 
of the material strength of the British Empire. The iron 
and steel industry had a considerable manufacturing 
potential. The cotton industry was at its zenith. In many other 
industries production was increasing steadily. I did not feel justified 
in withholding my observations from the German Government 
and therefore I notified Hitler of my return home as well as 
Goering and Ribbentrop. From the first two I received no reply 
whatever. Ribbentrop did at any rate acknowledge the receipt of 
my letter. 

The confidential reports I received almost immediately on my 
return to Berlin were disquieting. My long absence — ^from the 
beginning of March to the beginning of August 1939 — ^meant 
that I had missed much of what had been happening at home in the 
meantime. The quarrel with Poland, deliberately fanned by Hitler 
and finally brought to a climax in mid-August according to plan, 
was bound to lead to armed conflict. 

On the 25 th August I was informed through the agency of 
Admiral Canaris, head of the Abtoehr, that the attack on Poland 
was due to be launched at once. Through the good offices of 
General Oster I immediately sought to push on to Zossen, where 
the headquarters of the Wehmiacht was stationed. I wanted to give 
General von Brauchitsch a last-minute warning and try to rouse 
him to counter-action. I had been working for a considerable 
period with General Thomas, head of the Wehnoirtschaft, in an 
endeavour to prevent a war. Through Admiral Canaris he now 
notified Zossen by phone of my intended visit. The reply came back 
that Brauchitsch declined to see me and, if I persisted, would 
arrest me forthwith. 

We experienced a temporary relief on learning almost at once 
that the order to attack had been rescinded. We were the more 
astounded when, eight days later, the command went forth to 
march into Poland. In Hitler’s challenge to the British and French 
ultimatum which expired on the 3rd September I saw the downfall 



Frmn an Attempted Coup d'Mtat to an Attempted Assassination 407 

of my last hopes of stemming the tide of war. Not a Geman- 
Polish conflict but the Second World War had begun. 

The attitude of the military leaders seemed to me incomprehens- 
ible. In all the conversations I had had with Generals of my 
acquaintance it transpired again and again that Hitler had invari- 
ably reassured them on the subject of possible intervention by the 
Western Powers in the event of a war with Poland. When the ulti- 
mata expired the leaders of the Army, Luftwaffe and Navy were 
obliged to state frankly either that Hitler had been mistaken or that 
he had deliberately misled them. They should have made it clear 
to Hitler that Germany was not equipped for a Second World 
War and would never come through such a war. Nothing of the 
sort happened. The evil ran its course. 

The military leaders are to blame, however, not merely because 
they failed in tlieir moral and political duty but because of their 
military inadequacy. At the Niimberg trial, Field-Marshal Milch 
declared that at the beginning of the war the British Air Force 
alone was stronger than the German. Admiral Ddnitz stated in 
court that at the outbreak of war Germany possessed a total of 
fifteen submarines fit for Atlantic use. And General Jodi gave the 
Army strength as only seventy-five divisions, some of which were 
not even fully armed. How could the High Command venture to 
embark on a World War with such disastrously inadequate pre- 
paration? 

From post-war literature we have learnt of the various attempts 
to take Hitler prisoner and thereby prevent him from continuing 
the war. I knew about nearly all of these attempts, and encouraged 
and backed them. In these pages, however, I only want to describe 
my own experiences during this period. 

At the turn of the year 1939-40 1 was livingas a private individual, 
partly in Berlin, partly in my country house. I was approached 
one day by one of the big American magazines with die request 
that I would acqtiaint the American public with the German 
situation, German frame of mind and German aims. In accordance 
with official etiquette I reported the matter to Ribbentrop, who 
agreed but asked me to send him the manuscript before despatching 
it, which I declined to do. 

A few weeks later I received another similar offer from America. 
I wrote Hitler: 

I feel it my duty to apprise you of the following: 

On the aoth December 1939 1 received a telegraphic offer from 
Foreign Affairs, the highly-esteemed American periodical devoted 
to foreign politics. They ask me to write an article on Germany’s 
attitiide to the present conflict and add that my name commands 



4o8 


My First Seventy-Six Years 

such respect over there that whatever I write would be certain to 
receive the greatest attention. I have informed the Minister of 
Foreign Affairs of this offer and, in case he should be interested, 
have placed myself at his disposal for the purposes of discussion. 
The Foreign Minister thereupon suggested that I should write the 
article and submit it to him for censorship. Since I could not possi- 
bly agree to such conditions, either for the sake of the Americans 
or for my own sake, I put the matter aside. 

Now I have received a similar offer from the Editor of the Christ- 
ian Science Monitor, the well-known American daily with more than 
two million subscribers. I do not wish to approach the Foreign 
Minister again, neither do I wish to let this second offer slip without 
at least drawing your attention to the fact, mein Fiihrer, that here 
at home the possibilities afforded us for bringing German influence 
to bear on American opinion are obviously inadequate. 

On receipt of this letter Hitler sent for me. I pointed out that an 
occasional article in American periodicals was not sufficient to 
influence the growing anti-German tendency in the United States 
in our favour. I suggested that we should send over someone who 
would maintain steady contact with the public and particularly 
with the Press. To the question whether I would be prepared to 
do this I replied in the affirmative. Hitler received the suggestion 
favourably and said he would discuss the matter with Ribbentrop. 
I never heard anything further on the subject. 

Instead, Ribbentrop not long afterwards sent over a BerUn 
lawyer who was a member of the Party, with instructions to work 
for an improvement in the steadily growing feeling against Ger- 
many in the United States. The gentleman did not stay long. On 
his return he told me how badly he had been treated over Siere, 
He had been exposed to constant threats by telephone against his 
personal safety; he had been expelled from no fewer flian four 
hotels after offiy a short time in each, and had been unable to 
gain admission to a single club. 

It might still, perhaps, have been possible to effect an improve- 
ment in our relations with America when Sumner Welles, the 
American Under-Secretary of State, made a tour of the European 
Governments at the beginning of March 1940, in the course of 
which he also visited Berlin. Although the American Government 
had been informed of my dismissal, it had stated that Mr. Sumner 
Welles wished to have speech with four persons: Adolf Hitler, 
Hermann Goering, Ribbentrop and Dr. Schacht. I was informed 
of this by the Foreign Office wifli audibly expressed surprise at 
Welles’ intention to call upon me. 

Ribbentrop quite obviously wanted to prevent a tite-d-tite 
between Sumner Welles and myself. First he invited me to a 




J'Vriliii^ this hook 





From an Attempted Coup d'Ftat to an Attempted Assassination 409 

luncheon to be given in honour of Mr. Welles; I could have a 
talk with him then. Curiously enough this luncheon was cancelled. 
In any case, Mr, Welles’ express desire to talk to me could not 
simply be ignored. When the American Charge d’Affaires invited 
me to a tea-party for the purpose of a discussion with Mr. Welles, the 
head of the Records Department of the Foreign Office sent for me 
and urged me to take an interpreter along. Somewhat maliciously 
I replied: 

“I don’t think that will be necessary, and I beg to dispense 
with an interpreter since I assume that Mr. Sumner Welles -wall 
speak at least one of the three European languages.” 

On Sunday the 3rd March 1940, at five o’clock in the afternoon, 
I arrived at the house of the American Charge d’Affaires, Mr. Kirk, 
where I met guests from the Diplomatic Corps — ^the enc hantin g 
wife of Signor Attolico, the Italian Ambassador ; also the Belgian 
Ambassador and the Netherlands Minister, with their wives. 
Our host himself was not present. At midday he had gone with 
Sumner Welles to Karinhall to see Hermann Goering. Since they 
had left between twelve and one they had reckoned to lunch with 
Goering. When they returned to Grunewald shortly before six we 
learnt that not only had they had no lunch but that no refreshment 
of any kind had been offered them all the time they had been at 
Karinhall. Their immediate need was to get something to eat. 

From my private conversation with Sumner Welles I gathered 
that Hitler had not impressed him unfavourably. Why Welles 
should have been so badly treated from a social standpoint remains 
a puzzle. Ribbentrop, whose perfect mastery of the English lan- 
guage was known to everyone, actually went so far as to receive 
Mr. Welles in the presence of an interpreter and to have the 
American’s speech translated. 

During my talk with Welles it transpired that he had discussed 
with Hitler the possibility of concluding a peace through American 
mediation. Hitler had stipulated that in the event of such a peace 
Germany must remain an ethnological entity, that is, with the 
frontiers of 1914, the inclusion of Austria and the Sudetenland, but 
excluding Alsace-Lorraine, To me his economic expositions were 
particularly interesting. 

“We cannot know whether it will be possible to conclude peace 
any more than we can foresee the outcome of the war. But one 
thing is certain : whichever way the war goes the economic problems 
will remain the same as before. The war will not solve any of the 
economic questions. These problems extend far beyond the frame- 
work of the belligerent cotmtries. That is the reason why America 
is already busy preparing for these problems.” 

14 



410 


My First Seventy-Six Years 

“I find these statements extraordinarily comforting, Mr. 
Welles,” I replied. “In my opinion the economic problems that 
the end of the war will bring are more far-reaching than the 
political problems.” 

“ It is precisely on account of this view that I was commissioned 
to seek you out, Herr Schacht, and have a talk with you during my 
visit to Berlin. You know, of course, that in America you are very 
highly thought of as an economist.” 

After a lengthy exchange of views on matters economic I made 
no secret of the fact that I was diametrically opposed to the war, 
and that the American Embassy knew this since Donald Heath, 
the Councillor to the Embassy, occasionally came to see me. I 
should rejoice greatly, therefore, if the American Government were 
to embark on the work of mediation. 

I saw Hitler on one more official occasion, when he returned 
from his successful campaign against France. All Ministers 
and Party leaders were bidden to come to the Anhalter railway 
station to welcome him. My absence from this ceremony would 
have created a very bad impression: there remained nothing for it 
but to obey the summons. On the way there my car picked up the 
Minister, Alfred Rosenberg. Rosenberg was an invariably reserved 
and silent man. I always had the impression that he was afraid to 
expose his intellectual insignificance if he took too great a part in 
the conversation. On this drive, too, it was almost impossible to 
get a word out of him. 

On the platform all the officials and Party pundits were assembled 
in uniform, covered with gold braid. As the one and only civilian 
I must have created a strange impression in my lounge suit. But 
they were used to that where I was concerned. I have never worn 
uniform. Once, when I told Hitler that no-one could hope to 
succeed with the Party unless he held some rank and wore uniform, 
he immediately replied: 

“You can have aU the uniforms you want from me.” 

I raised both hands deprecatingly and exclaimed; “Oh, please I 
I would rather not!” 

When the train steamed in Hitler alighted and walked down the 
line of Ministers, shook hands, nodded and beamed on everyone. 
He was obviously in high good hximour and spoke a few words to 
this or that individual. V^en he came to me he looked at me 
triumphantly and exclaimed: 

"Well, Herr Schacht, what do you say now?” 

For a moment I did not know |iow to reply in such a way as to ex- 
press neither praise nor censure. I simply took his hand and said: 



From an Attempted Coup d'Mtat to an Attempted Assassination 41 1 

“May God protect you.” 

He walked away, completely unresponsive. 

The welcome over, the whole procession drove to the Chancel- 
lery through the cheering, seething crowd. So far as I know this is 
the last occasion on which Hitler — ^fiill of pride at his victory over 
France — stood upright in his car to show himself to the multitude. 

My car drew up at the Chancellery. I let Rosenberg get out — he 
was attending the reception which followed the station ceremony. 
He looked round at me enquiringly as I remained seated. I said: 

“Not my line”, and drove home. 

I made no secret of my opposition to the war, even to members 
of the Government. In December 1940, Herr von Weizsacker, 
Secretary of State in the Foreign Office, sent for me and warned 
me, on behalf of the Foreign Minister, to refrain from defeatist 
statements. I asked who it was to whom I was supposed to have 
made such statements, and was told Funk, the Minister for 
Economic Affairs. Wliereupon I sent him the following letter: 

My dear Colleague: 

Today, on behalf of Herr von Ribbentrop, the Secretary of 
State in the Foreign Office, Herr von Weizsacker, surprised me by 
pointing out that I had expressed pessimistic opinions in regard to 
the present situation. In reply to my enquiry as to how he came by 
such knowledge, your name was given as the source of information. 
I recollect very well having had one or two discussions with you on 
the subject of our economic situation, in which you frankly desired 
to know my views. These I made known to you on the lines I have 
taken for years, namely that from an economic standpoint we are 
not equipped for a war of long duration. And that a war with 
Britain would be one of long duration was obvious to anyone with 
a knowledge of the Anglo-Saxon mentality. 

Herr von Ribbentrop’s object in referring to this matter was, 
I regret to say, not made clear to me. If he desired me to alter my 
opinion he should have furnished convincing and material reasons 
why I should do so. Such was not the case. On the other hand, I 
cannot imagine that Herr von Ribbentrop would wish me, in 
professional discussions with the Ftthrer’s coimcillors, to conceal 
or misrepresent my views. That would be to misconstrue my 
loyalty to the Ftihrer. 

I have asked Herr von Weizsacker to reply to Herr von Ribben- 
trop that, so long as the Fhhrer wishes me to remain a Minister of 
the Reich, it is my right and my duty to reply to any enqui^ by a 
fellow-Minister in a manner commensurate with my convictions 
and with the truth. 

In view of Herr von Ribbentrop having referred to you in this 
connection, I cannot refrain from bringing the above matter to 
your notice. 



412 My First Seventy-Six Years 

I sent a copy of this letter to Herr von Weizsacker with the 
request that he would submit it to his chief. 

On the 30th January 1941, the eighth anniversary of the 
“thousand-year Reich", the Vdikische Beobachter devoted several 
large complete pages to a chronicle of National-Socialist achieve- 
ments during those eight years. Every tiniest detail was mentioned : 
the names of persona in leading positions, the decreeing of 
laws and ordinances, festivities and ceremonies, parades and ex- 
hibitions ; in short everything that could be described as worth 
mentioning, if only for a brief period. 

In this detailed chronicle there was no mention, not a single 
word, of anything I had accomplished. My existence was completely 
ignored, my name never appeared once in the whole long record. 

In the hands of a totalitarian t5rrant such dead silence is a terrible 
political weapon. It shows clearly how it was possible to keep the 
German people in blindness and ignorance. The path to publicity 
was barred to anyone not willing to kowtow to the system. No 
artist who went his own way, unapproved by Hitler, could get into 
any exhibition, any display, or obtain any kind of publicity. No 
bookshop would sell, no theatre would perform, boolcs or plays by 
anyone whose work was not “approved 

There were many martyrs to the Hitler regime, but they dis- 
appeared noiselessly in the cells and graves of the concentration 
camps, without an^hing being heard of them. But of what use is 
martyrdom in the struggle against power if it is not made known 
and thereby given the chance to stir up others? Crimes committed 
by Party members — and such crimes were legion — ^were never 
allowed to be made public, even when the verdicts were those of 
the regular courts of justice. When in January 1943 I finally 
managed to obtain my release from the nominal post of Minister 
without Portfolio, no mention of it — ^not so much as a word— - 
was made public. 

The complete control of the means of publication and their 
misuse by evil rulers is a political danger of the worst kind, 
whether these rulers be the State, or Party groups, or individual 
capitalists. In any reasonable Press legislation, even dead silence 
should be taken into account. The right to publish and the duty 
to publish go hand in hand. 

In February 1941 I visited Hitler once again, as I thought it 
my duty to acquaint him with my forthcoming second marriage. 
As I was on the point of leaving the room he called me back: 

“A year ago you suggested that you should go to America. 
Do you consider it would still be possible to carry out such an 
intention?” 



From an Attefnpted Conp d'£tat to an Attempted Assassination 413 

“I do not consider that such a journey would be possible today. 
Since the Lend-Lease law came into force, I consider there is no 
chance whatever of achieving any positive results for Germany.” 

This was the last occasion on which I saw Hitler. 

Early in March 1941, my wife and I were married. For our 
honeymoon we went to Switzerland, where we met and had man y 
interviews not only with Germans living there and with members 
of the Embassy, but also with S-wiss friends. 

Coming as it did in the midst of the heartrending events of that 
time, our wedding trip was like an oasis. It enabled me to forget 
the risk that my re-marriage involved for my young wife, namely, 
that at any moment I was liable to be unmasked as a traitor. But 
my wife was equal to any emergency. 

Of a serene, cheerful nature, receptive to all manner of beauty 
and to the things of the spirit, her main interest and study was 
devoted to painting, the plastic arts, and architecture. In addition 
she was fond of andytical and philosophic literature. As a grown- 
up woman she started to learn Latin. Her critical faculties in the 
realm of art and her knowledge of the history of art stood her in 
very good stead when the new Munich “House of Art” was 
opened. There she was a member of the staff, having been trans- 
ferred from the National Lindenmuseum at Altenburg (Thuringia) 
where she had worked as an assistant. 

1 had come to know her in Munich when we had met as members 
of a jolly party at the “Bonbonnifere”. Like so many others who 
do not Icnow me personally she had pictured me as a stiff-and- 
starched, chilly sober-sides, and was surprised to see me laughing 
heartily and unrestrainedly at the cabaret show. 

What attracted me was not merely the slender figure with the 
well-cut features, curly fair hair and blue eyes which might have 
served as a model for the Epple angels in Bogenhausen Church ; it 
was even more her brilliant wit, her aspiring soul, her uninhibited 
comradeship and sympathy. Nevertheless, it was some little time 
before we finally understood one another. She had many other 
admirers; she was thirty years younger than I and had a satis- 
fying career. Dare I tie her to myself, standing as I did politically 
in constant peril? Fate and love decided for us; neitW of us 
has regretted it. But together with my gratitude to this woman for 
all the happiness she has given me, let me here express some of 
our undying gratitude to the women of Germany for all that they 
have been to their menfolk during the war and post-war years of 
tribulation. Courage in the face of the enemy we rightly prize as 
heroism, but even greater and more blessed was the heroism 



414 My First Seventy-Six Years 

displayed by our women in their struggle against poverty and 
distress, humiliation and captivity. 

For a brief three years I was able to safeguard my wife from care 
and anxiety. Then her sufferings began. I was arrested under 
Hitler with the prospect of being hanged for high treason ; grave 
charges were preferred against me at the International Tribunal at 
Niirnberg ; I was imprisoned for years by the German Denazifica- 
tion Tribunals ; temporarily condemned to eight years in a Labour 
Camp; outlawed by the people of Germany at the instigation of 
those who had failed to make good under the Weimar Republic 
and had now been washed up again on the crest of the wave. I was 
subjected to palpable threats on the part of Communists and 
Social-Democrats ; my professional honour was impugned by the 
Social-Democratic Authorities of the Hanseatic city of Hamburg. 
Such were the blows that rained down upon my young wife. She 
met and overcame them all with exemplary steadfastness, dignity, 
fearlessness and energy. 

No forebodings, however, came to trouble our Swiss honey- 
moon. We gave ourselves up to the happiness of the hour. Laugh- 
ingly we welcomed the spring at Lugano, strolled along mountain 
pathways at Gandria, went on pilgrimage to the nearby mountains, 
the scene of Gerhart Hauptmann’s Heretic of Soana. In memory 
of him and of Agnes Giinther’s novel,* we jested lightheartedly; 

There where the Fool and her Saint did dwell, 
Shepherd-maid and Pastor, 

There they spent their honeymoon, 

The Saint and her Fool. 

The Swiss papers were friendly and featured our visit in letter- 
press and pictures. I had friendly talks with representatives of the 
Swiss Government. That was in 1941 when I had already relin- 
quished my posts as Minister for Economic Affairs and President 
of the Reichsbank, and thereby severed my connection with the 
Hitler regime, I little dreamed that ten years later Switzerland 
would refuse to grant me a visa to enter the country on the ground 
that I was an undesirable alien. What change had taken place in 
my outlook since 1941 ? I had been suspected by Hitler of high 
treason, imprisoned and threatened with death, while in Niirnberg 
the Allies, for completely opposite reasons, had wanted to hang 
me for conspiring with Hitler, Throughout this entire decade I 
had remained the same; it was the Swiss Government that had 
changed. 

* Die Heilige tmd ikr Narr — The Saint and her Fool. 



From an Attempted Coup d'jStat to an Attempted Assassination 415 

During this trip I had an interesting discussion with one of the 
leading Swiss bankers over a question of which the pros and cons 
were being hotly debated by the Swiss Government, During the 
course of the war and down to the time of which I write Switzer- 
land had been actively concerned in the delivery of large quantities 
of goods to Germany, including, of course, much war material; 
thereby — as in the First World War — reaping unusually large 
profits. Hitherto, the German Government had paid for these 
deliveries mainly in cash ; now, however, the Reich had approached 
Switzerland with a request for a big credit. The question was 
whether to grant this credit, or to restrict deliveries to those 
payable in cash. What did I think about it ? 

I replied that I would endeavour to answer this question entirely 
from the standpoint of the Swiss economy. Viewed from this angle 
it would be far better for Switzerland to continue to make deliveries 
against a partial credit than to have to give up the deliveries alto- 
gether. If a great part of the deliveries were to stop it would mean, 
among other upsets, considerable unemployment in Switzerland 
which would have to be met out of State funds. Social unrest might 
very likely follow, which could have an unpleasant effect on the 
domestic policy of the country, particularly in wartime, to say 
nothing of considerations of foreign policy being involved. 
Furthermore, the sum total of the credit would not amount to 
anything very excessive, since Germany made many counter- 
deliveries to Switzerland which not only covered part of the credit 
but which also, according to their nature, constituted important 
factors for the pursuance of Swiss economic policy. I referred 
especially to coal. 

During this conversation, I reminded my companion that I had 
once given his coimtry a piece of good advice on a vital economic 
matter, which the Swiss Government of the day had unfortunately 
omitted to follow. It was at the beginning of Hitler’s rule, not long 
after we had stopped paying interest on our foreign loans, I had 
suggested to the Swiss Government that they might obtain from 
Germany a sufficient quantity of coal to enable them to stock up a 
full year’s requirements. I pointed out that Switzerland was very 
dependent on coal deliveries from Germany and that it would be 
a great safeguard in any possible economic or political crisis if a 
stock of coal were available at all times for transport and industrial 
purposes. I would be prepared to send sufficient stocks of coal 
to Switzerland to set off the servicing of these loans. Despite this 
favourable offer the proposal was not accepted by the Swiss Govern- 
ment, the reason given being that it would be impossible to persuade 
the Swiss coal-merchants to agree unanimously to such a step. 



41 6 My First Seventy- Six Years 

Early in April 1941 we returned from our honeymoon to our 
country place at Giihlen. In the course of the next few days I 
learned through my indirect political and military connections of 
Hitler’s intention to attack Russia. 

Relations between Germany and Russia — ^which had seemed to 
be on a friendly footing following the mutual Agreement at the 
end of August 1939 — ^had not improved with the passage of time. 
The atmosphere during Molotov’s visit to Berlin had been 
decidedly cool. An event which attracted little attention indicated 
the Party obstructions to which Hitler had exposed himself when 
he signed the Pact with Russia. This Pact had never been approved 
by many Party circles. For years a war of ideas had been waged 
against Bolshevism through intensive propaganda — and now this 
was to be replaced by friendship. There is no room in ideological 
warfare for such tactical volte-face, reshuffling or regrouping. 

When Molotov was expected in Berlin, Foreign Minister 
Ribbentrop sent a request to I^utze, the S.A. Chief of Staff, to 
provide the necessary complement of men to line the streets 
through which Molotov would drive on his arrival in the capital. 
Lutze turned down this request on the express grounds that he 
could not expect his anti-Bolshevist men to take part in a reception 
in honour of one of the chief representatives of Bolshevism. I do 
not know if Ribbentrop reported this refusal to Hitler. At any 
rate, when Molotov arrived the cordons lining the streets consisted 
solely of S.S. men in their black uniforms. 

My friends and I were convinced that to attack Russia was sheer 
madness. If we had hoped, till now, that it might still be possible 
to end the war by recourse to any reasonable means, that hope 
would be practically shattei'ed by the inclusion of Russia in the 
ranks of our enemies. 

Individual Party leaders, who suspected or Icnew of Hitler’s 
intention to make war on Russia, must have been equally aghast. 
The best proof of this is Rudolf Hess’ flight to England, undertaken 
without Hitler’s knowledge. But if Hess thought that by his flight 
he could avert destiny, it testifies only to the complete ignorance 
of foreign affairs that characterized nearly all the Party leaders. 

The first military encountera with the entirely inadequately 
prepared Russians were those great valley engagements which 
were among Hitler’s successes and in which some millions of 
Russians were taken prisoner. 

I took advantage of these initial victories to compose a letter to 
Hitler in September 1941 . In this letter I explained that a turning- 
point had been reached. Hitler was at the zenith of his military 
successes. The Allies, to a great extent, still overestimated Ger- 



Frmn an Attempted Coup d’Etat to an Attetnpted Assassination 417 

many’s strength. The moment had come for Hitler to seize the 
initiative for a vigorous peace policy. I concluded : 

“In the case of such initiative the method of procedure is of 
paramount importance. 

1 . Public speeches should be excluded from the start. 

2. Equally, contact should not be sought on political grounds as 
that would be regarded as a sign of weakness. Rather, it should 
begin from an economic angle. 

3. It can only originate in America, vdth whom we are still not 
officially at war. 

4. I still think it stands a chance in that country, even now, in 
spite of ever3rthing.” 

Hitler’s reaction to this communication was in the negative. 
Secretary of State Lammers wrote me: 

“The Fiihrer has personally read your letter and instructed me 
to convey his thanks to you.” 

I heard indirectly that Hitler had told his Generals of my letter 
and remarked, “ Schacht still doesn’t rmderstand me.” It was one 
of his few true statements. 

Hitler’s attempt to include Spain in his military calculations was 
a failure. The war was carried over into Africa. The, conquest of 
Moscow, for whieh Guderian had reckoned three months at the 
beginning of the Russian campaign, failed to come off. The 
Russians pulled themselves together. Thanks to extensive material 
aid from the Allies their resistance grew continually stronger. 
German industry certainly did everytffing possible to ensure the 
supply of war material, but the despatch of reinforcements from 
Germany became increasingly difficult. 

In February 1 942, a general fiat went forth to all Ministers of the 
Reich forbidding them to listen to foreign radio transmitters. 
Despite my protest the han continued to hold good in my case also, 
but Lammers, the Secretary of State, wrote me : 

“To enable you to obtain information re foreign radio propa- 
ganda on matters touching your professional fidd of action, I 
have arranged with the Minister of Public Enlightenment and 
Propaganda that a brief summary of foreign news items shall be de- 
livered to you on request, in so far as it concerns your professional 
activities.” 

My protest had been rejected by Hitler on the ground that 
it did not affect my prestige in any way. My reply to Hitler was as 
follows : 

“The ban on listening to foreign broadcasts represents lack of 
confidence in my loyalty and my powers of discrimination. There 



41 8 My First Seventy-Six Years 

are no grounds whatever for either. My prestige will not be affected. 
Prestige is not bestowed, it must be earned. 

“But if, mein Fuhrer, the i-esult of your decision is to deprive 
me professionally of opportunities for obtaining information, and 
personally of your trust in me, then I would hereby request you to 
release me from my office as a Minister of the Reich.” 

In reply to Lammers’ suggestion that Goebbels should furnish 
me with information I wrote : 

“I regret that I am unable to avail myself of the offer by the 
Minister for Public Enlightenment and Propaganda, as this 
Minister is not competent to pronounce an opinion on the material 
in which I am interested.” 

My release from office was not granted. But this correspondence 
shows how the tension between Hitler and myself had increased. 

In November 1943 — obviously owing to an oversight in the 
Chancellery — ^there came into my hands the draft of a decree 
providing for the calling-up of pupils from the upper forms in 
secondary schools for the protection of airfields and precautions 
against air raids. This oversight gave me a welcome opportunity 
once again to state my views on the political situation. It was when 
furious battles were raging around Stalingrad which had not yet, 
however, achieved for Hitler the disastrous results that followed a 
few weeks later. I sent the following letter to Hermann Goering 
who had issued the draft order: 

My dear Field-Marshal, 

By way of the Chancellery I am apprised of your draft order 
concerning the calling-up of fifteen-year-old schoolboys for war 
service. Since the end of 1937, as you know, I have been a Minister 
in name only, without any official sphere of action. No cabinet 
councils have been held since 1938. 1 have never been called upon 
to attend any ministerial discussions. 1 live in tire country in com- 
plete retirement. For some months past I have been expressly for- 
bidden to listen to foreign broadcasts, so that my only source of 
information on the military, economic and political situation is 
that available to every discriminating German, whose numbers 
among the so-called masses should not be underestimated. Since 
I am not a member of the National Defence Council I have nothing 
to do with the passing of the draft order. Although I can therefore 
exonerate myself from any share of responsibility, my conscience 
and the desire to leave no stone unturned prompt me to send you 
these lines. 

By way of preliminaries I may state that from the very first my 
attitude towards those in responsible positions has been that from 
the economic standpoint we were not adequately equipped for a 
hng war. But that ffie war would be a long one must have been 



From an Attempted Coup d’etat to an Attempted Assassination 419 

obvious to anyone with a knowledge of Anglo-Saxon mentality 
after Britain had given notice of her resolve to look upon a German 
attack on Poland in the light of a casta belli. Early in 1940 I sug- 
gested to the Fiihrer that I should go to the United States in an 
attempt to slow down America’s armed support of Britain, and if 
possible to prevent America becoming more deeply involved in the 
war. The Minister for Foreign Affairs declined this offer, which 
the Fiihrer viewed sympathetically. I brought the matter to the 
Fiihrer’s notice again in the autumn of 1941 when we were then at 
the height of our successes, but to no purpose. 

It may be necessary, from a military point of view, to call up the 
fifteen-year-olds but it will put a heavy strain on the German 
nation’s confidence in victory. The facts, as the German people 
see them, are as follows : 

1. The original prospects of a short war have not been fulfilled. 

2. The promised rapid subjugation of Britain by the Luft- 
waffe has not materialized. 

3. The prognostication that Germany would be kept safe- 
guarded from enemy air attacks has not been fulfilled. 

4. The repeated assurance that Russia’s powers of resistance 
had been de^itely broken has not been substantiated. 

5. On the contrary, the delivery to Russia of Allied war material 
and Russia’s reserves of manpower have led to severe cotmter- 
attacks on our Eastern Front. 

6. Despite repeated attempts, the originally victorious advance 
against Egypt has so far proved a failure. 

7. The landing of the Allies in West and North Africa, described 
as impossible, has nevertheless taken place. 

8. The extraordinarily large amount of shipping essential for this 
landing has shown that our U-boats, in spite of their considerable 
successes, have not sufficed to stop this means of transport. 

Add to this, retrenchments which are obvious to every member 
of the population — ^in the Civil Service, in transport, in war 
material, in employment of labomr. The calling-up of fifteen-year- 
olds will most assuredly strengthen misgivings as to how this war 
will actually end. 

This letter was read aloud to the Bench by the American Chief 
Prosecutor at Ntirnberg. From the manner in which he did so I 
was forced to conclude that the Prosecutor had previously failed 
either to read this letter right through or to read it carefully 
enough, for it exonerated me completely. At the end he could not 
refrain from remarking: “That’s a very good letter.” 

It certainly was a good letter. But it was also a very dangerous one 
for me. Seven weeks elapsed before the reaction of those in author- 
ity followed. On the 21st January 1943, Lanuners sent one of his 
departmental heads who handed me my discharge by Hitler from 



430 My First Seventy-Six Years 

the office of Minister without Portfolio. It was accompanied by a 
letter from the Secretary of State : 

“In view of your general attitude in the German Nation’s 
present fearful struggle, the Fiihrer has decided first of all to 
dismiss you from your post as Minister of the Reich.” 

That further action would soon follow this dismissal I gathered 
from the words “first of all”. I did not have long to wait. The next 
step took the form of a letter from Goering: 

“By way of reply to your defeatist letter, calculated to undermine 
the German people’s powers of resistance, I hereby expel you from 
the Prussian State Council. Goering, Marshal of the Greater 
German Reich.” 

I could not help smiling over this letter. The Prussian State 
Council had never had any significance. It had not been summoned 
for at least half a dozen years. To be expelled from this assembly 
did not, therefore, constitute a very heavy punishment. It struck 
me as even funnier, however, that I was supposed to have under- 
mined the German people’s powers of resistance by means of a 
private and confidential letter to Goering. 

Yet a further repercussion was that I received a letter, signed by 
Martin Bormann, instructing me on behalf of the Fiihrer to return 
the party’s gold badge of honour which had been awarded to all 
Ministers — ^including myself — on the 30th January 1937 to com- 
memorate the Hitler Government’s fourth year of existence. It 
gave me peculiar satisfaction to comply vrith this request. 

But I would have to reckon with further measures, and I 
endeavoured to elude them as swiftly and as completely as possible. 
I had spent my birthday, the zznd January 1943, at my country 
home. The next day I drove at once to my Berlin residence and 
noticed that the street was being watched by Gestapo agents who, 
according to their easily recognized custom, were strolling up and 
down near my home in the manner of innocent pedestrians. 

From there I drove to the home of my son-in-law at Schlachten- 
see and on the way realized that I was being trailed by a car full 
of Gestapo men, '^en I left I noticed that I was again shadowed 
by the Gestapo. 

I returned to Berlin, still followed by the Gestapo car, packed a 
couple of suitcases with necessities as quickly as possible and drove 
via Spandau to my country house. Shortly before we got to Span- 
dau the Gestapo seemed to realize ray intention and gave up any 
further attempt at shadowing me. The fact that for the next few 
months I remained exclusively on my estate probably induced them 
to refrain from visibly molesting me further. All my mail was read, 
of course, and all telephone calls tapped. 



From an Attempted Coup d'etat to an Attempted Assassinatum 42 1 

The events following my dismissal had impressed upon me the 
need to let any connections with people of my way of rTiinUng 
be as inconspicuous as possible. From the first, I had been in close 
touch with Goerdeler; now, however, I quietly severed all contact 
with him for his behaviour seemed to me far too lacking in caution. 
On the other hand old friends came to see me from rimp to ttmp in 
my country retreat. Particularly frequent visitors were Captain 
Striinck of the Reserves and his wife ; he was working with Canaris 
and always brought valuable information. Being a keen sportsman 
his visits were always camouflaged as invitations to shoot. Directly 
or indirectly, I remained in communication with — among others — 
Gisevius, Dr. Franz Reuter, Popitz (the Prussian Minister of 
Finance), Police Superintendent Nebe, Count Helldorf (Chief 
Commissioner of Police in Berlin), Herbert Goering (Reporter- 
in-Chief at the Ministry of Economic Affairs, cousin and con- 
firmed opponent of Hermann Goering), von Bismarck (Governor 
of a Prussian province and a brother of Prince Bismarck), and 
others. 

After the atmosphere in my neighbourhood had quietened down 
a little I took another short trip to Berlin in order to attend various 
discussions. 

In the summer of 1943 I made yet another attempt to intervene 
in the course of events, I wrote to Lammers: 

“The fate of Germany, of National-Socialism and of Hitler 
are so closely interwoven that even the treatment meted out to 
me cannot influence my loyalty and sense of duty. I should there- 
fore be grateful if you would inform me whether the Fiihrer 
would be prepared once again to accept from me a short written 
statement on the political situation.” 

Lanuners replied on the 19th August 1943 : 

“I have informed the Fiihrer of your wish to send him a brief 
written statement on the political situation. The Fiihrer requests 
that you will refrain from doing so.” 

I kept away from the fateful meetings centering around Goer- 
deler and Popitz, the Minister of Finance. Goerdeler’s doings in 
particular were too apt to attract attention. Dr. Joseph Miiller 
(later Bavarian Minister of Justice) stated at one of my denazifica- 
tion proceedings: “Goerdeler was like a motor engine that runs 
too noisily.” That was my impression too, 

I never took any part in Goerdeler’s many discussions about the 
programme of a ftiture Government and the formation of a future 
Cabinet. Together with Witzleben, I had already made up my imnd 
in 1938 that, if we succeeded in eliminating Hitler, a iniht^ 
Government must be set up first of all so as to ensure the formation 



422 My First Seventy-Six Years 

of a subsequent Government by means of general elections. Among 
other things, we had provided for the appointment of an auxiliary 
council consisting of well-known representatives of the workers, 
who would act in an advisory capacity to the provisional military 
Government. The working-out of proclamations to the Ger man 
people, and programme manifestos for a future Government — & 
favourite occupation with Goerdeler — ^seemed to me idiotic. Time 
enough for such things when the event had actually occurred, when 
they could be completed in twenty-four hours. 

One of our adherents, who was also a member of Canaris’ 
Abwehr, was Reichsgerichtsrat* Dr. von Dohnanyi. As early as 
1942 he wanted to read me a proclamation he had drawn up 
beginning with the words: “tiitler is dead!” I interrupted him at 
once with the request that he would let me hear the rest when 
Hitler really was dead. 

To compile lists of Ministers and commit them to paper seemed 
to me even more crazy than composing proclamations. There 
were none too many competent people to choose from. One 
could make a mental note of the few who were worth considering 
without setting them down in writing. 

I continued studiously to avoid meeting Goerdeler. Shortly 
before the attempt on Hitler’s life, therefore, ex-Ambassador von 
Hassel came to sound me as to whether I would be prepared to 
join a Goerdeler cabinet. I told him that such an enquiry was much 
too premature. Apparently, however, he wanted to tie me down 
somehow or other, whereupon I declared that at this stage I 
wasn’t going to let myself be tied down by Goerdeler in any way, 
since I was not at all certain what policy Goerdeler intended to 
pursue. In the event of a new Government, I should in any case 
consider that my duty lay in making use of my foreign connections 
in an endeavour to bring about an immediate understanding with 
the Allied Governments. Our conversation had taken place in the 
park at Sansouci, Potsdam. Hassel left in an obviously dissatisfied 
frame of mind ; he seemed to be afraid that I should obstruct his 
desire to become Foreign Minister. 

Another important link was established through Lieutenant- 
Colonel Gronau, an older friend of my son Jens, and Administra- 
tive officer of the Berlin Defence District. His reports were of 
great value. In the first months of 1944 Gronau enabled me to 
meet General Lindemann of the Artillery, one of the few senior 
officers whose dislike of the regime had reached the point where he 

* Reichsgerichtsrat: the nearest equivalent in this country is Queen’s 
Counsel. 



From an Attempted Coup (T £tat to an Attempted Assassination 423 

determined to take definite action. Shortly afterwards, Lindemann 
was appointed Master-General of the Ordnance and entrusted 
with the procuring of artillery equipment for the whole of the 
armies of the East. In this capacity he was able to keep in closest 
touch with headquarters, and soon made contact with the few 
other high-ranlting officers who, like himself, were prepared to 
bring the Hitler regime to a violent end. 

Here at last I had found a man who had direct access to Hitler, a 
facility I no longer enjoyed. Lindemann was stationed in the East, 
but whenever he came to Berlin we discussed the preparations for 
the attempt on Hitler and I used every opportunity to urge that it 
should be speeded up. 

The final preparations dragged on for several weeks. Various 
dates that we had had in view had to be postponed because Hitler’s 
movements meant that some obstacle or other was always cropping 
up. But it became more and more clear that action, as planned, 
might be expected about mid-July, 

On the 17th July, in order not to be held up in my local arrange- 
ments, I took my two small children by my second marriage to my 
daughter in Upper Bavaria. On the 20th July, I was in the Hotel 
Regina in Munich when I heard that the plot had failed. 

The morning after the attempt on Hitler, the hotel porter drew 
my attention to the fact that I was being watched by some Gestapo 
officials stationed in the hotel. He pointed out two of these gentry. 
I thought it would be wise to leave, and on the 22nd July was ba^ 
again at my country home near Berlin. 

I spent the whole day alone with my wife and contented myself 
with listening to the radio reporte of the arrests and shootings. It 
was not until much later that I learnt of the events that had taken 
place at the Ministry of War in the Bendlerstrasse. 

On the a3rd July, at 7 o’clock in the morning, I was awakened by 
our cook knocking on my bedroom door wiffi the news that the 
Gestapo wished to speak to me. Still in pyjamas I opened the door. 

I was informed that I was under arrest. 

Quite calmly I dressed and told my wife, who immediately did 
likewise. I was able to hand over the most important keys to my 
wife in the presence of the police. 

Then I was taken downstairs to the front door where several 
cars were standing, I bade farewell to my wife and called out that I 
should be badt again in a few days. Her face was deadly pale and 
I could see that she did not place much faith in my prophecy. 



CHAPTER FIFTY-FOUR 


Concentration Camps 

T he procession of cars took me to Ravensbriick Concentra- 
tion Camp near Fiirstenberg in Mecklenburg. As I was 
conducted to my cell, the guards, by way of a joke, mentioned 
that this was the same cell that my son-in-law had occupied before 
he had to undergo a sentence of two years’ imprisonment. 

From the moment I set foot in the cell at Ravensbriick until my 
final release on the and September 1948 — more than four years 
later — I had changed my prison no fewer than thirty-two times. 

I spent over two years in solitary confinement. The cells were 
very much alike, measuring usually twelve square yards, more 
or less. Sometimes the W.C. was in the cell, sometimes not. If not, 
you had to summon the guard to accompany you on every occasion. 
Sometimes the cells contained washing facilities, sometimes not. 
If not, you had to wash under supervision. Treatment by the 
guards was sometimes decent, sometimes bnital, according to the 
character of the individual. Very scant provision was made for 
intellectual reading. 

During this captivity of more than four years’ duration I had 
for the most part to evolve my occupations out of my own head. 
The food was always sufficient, but differed greatly in quality and 
was very often wretchedly poor. This was especially so in Ravens- 
briick, where I frequently had nothing but cabbage soup or some- 
thing similar for three days on end. On the whole, however, the 
treatment at Ravensbriick was not too bad at first. My chief warder, 
a Lithuanian German named Moschkus, could sometimes be 
persuaded to perform small favours in return for an occasional 
cigar from my scanty store. 

So long as I remained in solitary confinement, the separation 
from the other prisoners or camp inmates was strictly enforced. 
Only occasionally did I manage to get a glimpse of another cell, 
either in passing or through the shutter in the door which was 
opened when food was handed in. The building in which we were 
housed was only a small part of the very large camp and was 
obviously reserved for “politicals”. 

When we were taken across the courtyard for questioning I 
realized that there was a huge camp for women, Occasionally, up 



Concentration Camps 

to fifteen thousand women would be herded together in this place. 
From the window of the bathroom, which we were allowed to use 
once a week, I could sec into a separate courtyard in which those 
mothers were crowded whose children had been born while they 
were in camp. Gradually, too, I was able to identify “prominent” 
fellow-prisoners, among them General Haider, Ersing, the deputy 
of the Central Party, Secretary of State Piinder, Professor von 
Dietze of Freiburg; Schniewind, head of one of my depart- 
ments at the Ministry of Economic Affairs, Sperl, my Permanent 
Sea-etary, Albrecht Bernstorf from the Foreign Office, a certain 
Fraulein von Plettenberg, and the well-known cabaret artist, Isa 
Vermehren. 

My examination began a few days after I was arrested. From the 
first questions I realized at once that there was no really positive 
material evidence against me and that the method differed not at 
all from the customary formalities of the most elementary police 
procedure. As a result of my many changes of prison and con- 
centration camp I was photographed at least a dozen times, and 
I take it that my picture, together with my finger-prints, must 
have adorned the criminal albums of all the German and Allied 
authorities. 

For my first examination I was taken by car from Ravensbriick to 
Drdgen a few miles away, where there was a much smaller camp 
which, unlike Ravensbriick, did not give the impression of a 
collection of huts but consisted of permanent buildings. This camp 
was used as a police training-school. It was here, for instance, 
as I learnt later, that Noske, the Social-Democratic Minister of 
Defence, and General von Falltenhausen were interned. On one 
occasion during a break in the proceedings I was allowed to take a 
short walk about the camp and noticed a column of men in mili- 
tary formation, consisting for the most part of "looted Germans” 
{Bmtegermanen) who had been seized and brought in from the 
occupied Eastern Provinces. 

The first examination opened with the establishment of parti- 
culars as to my person by a certain Police-Lieutenant John. Next 
to him sat a lady typist. To my surprise, the first question, or 
rather the first order, was : 

“Give this lady particulars of your career.” 

After some humming and hawing as to extent and content I 
proceeded to dictate to the typist the story of my career, in so far 
as I considered it safe for the Gestapo to know it. It took several 
hours, and the substance of these recollections differed consider- 
ably from the transcription. 



426 My First Seventy- Six Years 

At the next hearing, the following day, the order went forth: 

“Give the names of your acquaintances and friends.” 

I thought for a moment and replied ; 

“No, I will not.” 

There ensued threatening gestures and some heated altercations 
before I succeeded in explaining myself : 

“I will not do so, in spite of your order, and for the following 
reason : If I start by mentioning any one name you will immediately 
assume that the person concerned might be of particular interest 
to you. If, however, I were accidentally to omit any name you would 
at once suspect me of having deliberately intended to conceal it. 
But I will make you another proposal. At my home, where my 
friends have frequently been to see me, we kept a visitors’ book. 
Go over there and ask my wife to give you the visitors’ book. You 
will find all the names you want in that.” 

I knew that this book contained only the names of guests who 
had spent the night at our house, 'Those who came for the 
day were not entered in it. Among the latter, of course, were the 
many political visitors of recent times, so that I was certain not, 
accidentally, to give any name away. 

The police-lieutenant accepted this suggestion and the hearing 
was postponed for a few days. In the meanwhile, Herr John him- 
self had been to my wife to fetch the visitors’ book, and it lay open 
in front of him when the hearing was resumed. 

During the whole of my four years’ imprisonment, my wife, by 
her complete understanding of all the dangers and all the circum- 
stances, was my greatest support. On this occasion, she immediately 
entertained Herr John to tea, and as a result of her conversation his 
attitude towards me visibly improved. 

In the intervening days I had managed, through my good 
Moschkus, to obtain the VolHsche Beohachter daily. One day, 
however, the newspaper was missing, and Moschkus declared it 
had not. come. The next day he said it had been mislaid. As 
persuasively as I could I said to him; 

“Moschkus, I still have one of my good cigar's — ^the last. You 
shall have this cigar if you will bring me the Volkische Beohachter 
of the day before yesterday.” 

The exchange worked perfectly — ^and then I saw why he had not 
given me that particular number. It contained the names of some 
twenty-eight officers and others who were implicated in the plot 
against Hitler, together with information as to which of them had 
been shot and which of them were still being sought for. Among 
the latter was my General Lindemann, who had managed to 
escape. 



Concentration Camps 427 

At the thought of Lindemann I experienced a tremendous 
relief. I realized that in my association with him lay my greatest 
danger; and I hoped too that he was safe. I resolved, therefore, 
that if I were questioned I would deny all connection with him. 

Curiously enough, at the ensuing hearing the question was 
never once put as to which of those twenty-eight men had been 
loiown to me, though any half-baked student of criminology would 
have asked it first of all. All subsequent questions were completely 
irrelevant. They dealt with my attitude to National-Socialism and 
similar matters, which of course I was able to answer perfectly. 

On the 28th August the situation suddenly became critical. 
Early in the morning I was ordered to take off my own clothes and 
put on the bluc-and- white prison garb. On my feet I had to wear 
great wooden shoes which could not be fastened, and in spite of 
all my efforts I could not persuade the camp superintendent — a 
real dyed-in-the-wool Gestapo man named Commissioner Lange 
— ^to let me keep my civilian clothes. I had never in all my life worn 
uniform; now I had to don convict’s garb although I was only 
a so-called “security” prisoner, i.e. at the worst liable to be 
questioned, and in no sense a convict. 

The reaction of my inner self to the convict uniform was curious 
in the extreme. I did not dwell so much on the degradation inher- 
ent in the order, but I immediately experienced a kind of inferiority 
complex that I had not been strong enough to prevent these people 
from shoving me iirto convict uniform against my will. To such 
depths had I sunk that no right or justice, no resistance, no rebel- 
lion against such abuse of authority was of any avail. This feeling 
was intensified inasmuch as the entire personnel, warders and 
guards, began at once to treat me as a criminal. How could it be 
otherwise when the wearing of the uniform placed me on a level 
with convicts, just as every ofiBcer’s uniform stamps its wearer — 
even the worst character — ^as a man of honour. 

My next thought was, how many others were in a similar plight. 
I was filled with a sense of solidarity with the other blue-and- 
white stripers. I nearly had to shake myself to make the overseer 
understand that I did not belong with the convicts. How hard it 
was to separate one’s own individuality from the uniform. And 
how hard it must be, once enrolled in a vast mass of uniformed 
people, to stand out from among them and admit frankly — 
neither mentally nor spiritually do I belong here. 

Hardly had I donned the convict’s uniform than I was hand- 
cuffed and hustled into a car like a bale of goods. Commissioner 
Lange himself occupied the front seat next the driver. I was being 



428 My First Seventy-Six Years 

transferred to the underground prison at No. 9, Prin2-Albrecht- 
strasse, the principal Berlin headquarters of the Secret Service. 

At first I had to wait for hours in an empty anteroom without 
being given anything to eat or drink. Finally it transpired that in 
the underground vaults there was not a single cell vacant. Where- 
upon I was driven to the Moabit Prison in the Lehrtersti'asse. My 
captors forgot to bring my suitcase containing my toilet things, 
and as I had no idea what they meant to do with me I did not at 
first notiee that it was missing. Not until later, when I landed up 
in the Moabit Prison, was I able to claim my suitcase. During the 
whole four years I experienced this system at the hands of the 
Nazis, the Americans and the denazification tribunals: prisoners 
were moved here and there without any warning and consigned 
to one place or another like so many parcels. 

The change from my comfortable, spotless home to the shabby 
cell in the Moabit was sheer torment. The cells remained lit up 
so that the warder could keep a check on the prisoner at any .time 
through the spy-hole in the door. For that reason I slept facing 
the wall on my plank-bed. Even so, I awoke at intervals. 

Once, when I opened my eyes, I saw a reddish-brown dot 
moving along the wall, barely a hand’s breadth away. The electric 
light shone directly on it; a moment later it had fallen victim to 
my finger nail — a bug. An anxious search followed. That first 
night I managed to bag five. By day I combed all four walls of my 
cell. Big bugs, little bugs got what was coming to them. But 
curiously enough the wall was painted in such a way that hunting 
for the creatures was not easy. A yellowish ground colour was 
thickly bespattered with brown spots, smears and blobs, so that 
one hardly knew which was paint .and which were bugs, especially 
as the dead bugs remained stuck to the walls. 

I would suggest that all the walls in such places should be painted 
in some light colour, for even a prisoner has the right to expect 
that his fight against vermin should not be made harder by 
enabling them to camouflage themselves ! 

Fortunately, I spent only three days in the Moabit cell. But 
since I did not receive my suitcase these three days passed without 
any possibility of wasliing or attending to other toilet essentials. 
In this antiquated prison the only provision for nature’s wants was a 
bucket in the cell which remained uncovered all day and all night. 
Every morning it had to be put outside the door, where prisoners 
sentenced to special fatigue duties took it away to be emptied. 

I was not until the fourth day when I returned to Prinz- 
Albrechtstrasse, where in the meantime a cell had become vacant. 



Concentration Camps ^29 

that my things were handed to me. My cell was in one of the vaults. 
A small window with a grating, high up near the ceiling, gave on 
to the open air. The room itself, however, was well below ground 
level. I spent four months in that cell without once getting a 
breath of fresh air. I was sixty-seven years old. 

My captivity was lightened by the fact that I was now permitted 
to wear my civilian clothes again, and also that my wife was 
allowed to send me boolcs and clean linen as well as some food to 
supplement my ordinary diet. During the first few days I was able 
to buy two small cigars a day which were passed through the 
spy-hole by the Kalfaktor who sold them. After a week, however, 
the man went past my door, and when I kept a look-out for him 
next day and asked for my cigars he replied that he had been 
forbidden to sell me any. 

In this prison the hearings were very soon resumed under a com- 
missioner named Stavitzki. His questions were no less idiotic than 
those put to me at Ravensbriick, but I gathered from the documents 
in front of him, on which he depended, that my transfer from 
Ravensbriick to the stricter discipline of the Prinz-Albrechtstrasse 
must have resulted from statements that Goerdeler had made about 
me. This assumption was confirmed later by my friend Schniewind. 
In his case, a page from Goerdeler’s examination had found its 
way into his own deposition by mistake. When he came to read 
his deposition prior to signing it he saw Goerdeler’s statements. 

The following will give some idea of the nature of these examina- 
tions: 

“You attended meetings of a committee at which the political 
situation was regularly discussed?” 

“Which committee do you mean?” 

“The chairman of the committee was Kommersienrat Reusch; 
those present were Messrs. Voegler, Bucher, Wentzel, and others.” 

“I can’t help laughing if you really think that this committee 
discussed politics. It was a gathering of about twelve persons, 
half of them industrialists, the other half farmers, who met at 
regular intervals to talk over the problems connected with the 
industrialization of agriculture.” 

“That is not correct. Herr Goerdeler has told us that this 
committee also discussed politics.” 

“I presume that if you have arrested me because I was a member 
of this committee you have taken all the others into custody as 
well. When you come to question these gentlemen you will find 
that my statements are correct. If by chance someone did let drop 
a political word or so it will have been during a personal conversa- 
tion, but not as a matter of committee business,” 



430 My First Seventy-Six Years 

“On the 13th July you had a discussion with Gisevius in Berlin.” 

“That is quite untrue.” 

“We have proofs that you did.” 

“They cannot be correct. Please let me see these proofs.” 

“We will not let you see them. But we know that at that date 
you saw and spoke with Gisevius.” 

“I don’t know how you came by your information, but if 
Gisevius was in Berlin at that time you must surely have arrested 
him meanwhile. Kindly allow me to meet him face to face.” 

“You also discussed a plan of escape with Goerdeler.” 

“I would urge you to let me confront Herr Goerdeler and you 
shall learn what it was that we discussed.” 

I had never heard that, shortly before the attempt on Hitler, 
Gisevius had left Switzerland, where he usually lived, and come 
to Berlin. I assumed that he was still in Switzerland. In his book, 
Gisevius himself has described his activities during those days, 
and I was able, much to my satisfaction, to ascertain that within 
that inner circle of conspirators to which he and Strunck belonged, 
every item of information which might have exposed them to 
danger was withheld, even from his intimates. I had done likewise. 

It was not possible to confront us with one another for the simple 
reason that Gisevius had succeeded in remaining in hiding from 
the Gestapo. My oft-repeated request — ^not only at the above- 
mentioned hearing but also at later ones — ^that Goerdeler and I 
might be brought face to face, was never granted. 

The complete failure of all these examinations to produce 
any results only served to increase the Gestapo commissioner’s 
fury against me. While in the Prinz-Albrechtstrasse, however, 
he was unable to vent his anger upon me, and it was only when we 
met again later in Flossenbiirg Camp that I experienced it in full 
force. 

Whenever I was escorted upstairs from the cellar to the room 
on the third floor where the hearings took place, we had to go 
through a whole lot of grotmd-floor corridors and passages, 
although the room was on die same side of the building as my cell. 
I noticed, too, that not far from my cell there was a large staircase 
leading to the upper floors which would shorten the distance 
considerably, and one day I asked the warder why we did not use 
this staircase. He was a Wurttemberger and eyed me somewhat 
auspiciously before replying; 

“Well, I know you won’t do an3rthing to get a junior into trouble. 
Let’s go up these stairs.” 

When we reached the second floor I noticed that the big window 
above the well of the staircase, which opened outwards, had been 



Concentration Camps 431 

broken and boarded up. In answer to my question the warder 
told me that Herr von Plettenberg, Keeper of the Crown Prince of 
Wiirttemberg’s Privy Purse, had committed suicide by throwing 
himself out of this window. He, too, had been suspected of com- 
plicity in the plot of the 20th July. In order to prevent a repetition 
of such incidents, warders had been forbidden to use this staircase 
when escorting prisoners. 

On the 6 th December, the day my wife had had permission to 
visit me for the first time, I was sent for again to the office and 
received the information that I was to be thken back to Ravens- 
briick. I managed to whisper encouragingly to my wife, whom I 
met in the Commissioner’s room, that the criminal hearing was 
over. There could only remain the political examination. When my 
wife said good-bye and shook hands she left a little packet of aspirin 
tablets in my hand. She knew that I occasionally took aspirin for 
sick headaches. 

The accommodation at Ravensbriick was the same as before. A 
few days after my re-transfer I was informed that there was a 
visitor for me. I was taken to Drdgen to the same room in which 
I had been questioned. There, to my great surprise, I found my 
son Jens, now a lieutenant, who was in Berlin on leave from the 
front and had managed to get permission to come and see me. 

This meeting with my son turned out to be vitally important for 
me. Before I was re-transferred to Ravensbriick, my wife had sent 
me a food parcel containing, among other things, an egg wrapped 
in a torn piece of newspaper, in which I read that the “deserter" 
General Lindemann of the Artillery, had been arrested, that in the 
course of arrest he had received shots in the abdomen from the 
police and was now in hospital. This information had revived all 
my former anxiety, since it implied the possibility of my being 
brought face to face with Lindemann. 

Besides the ofiSicial told off to keep an eye on us during my son’s 
visit, there was also a typist in the room. There came a moment 
when the official began to exchange jokes with the girl, and I 
seized the opportunity to whisper softly to my son : 

• “Is Lindemann alive?” 

“Lindemann is dead.’’ 

“Have you seen Gronau?” 

“Yesterday morning." 

“Listen, Jens: go to Gronau and tell him — ^in the event of his 
being questioned — -I have never set eyes on Lindemann in my 
Ufe.” 

My son nodded silently. 



433 My First Seventy-Six Years 

He managed to carry out my desperate request and thus saved 
my life. He lost his own at the end of the war. 

My dealings with General Lindemann had constituted the 
one supremely dangerous element : they were so unmistakably in- 
criminating that I could not have escaped the death sentence. 
The fact that I knew Lindemann might have come out at any time 
if Gronau, or Lindemann himself, had been questioned, since 
neither was in a position to know what statements the other would 
make, or had already made. Now, with Lindemann dead and 
Gronau forewarned I felt that danger was past. 

A few days later, Gestapo Conomissioner Lange entered my cell 
and said : 

“When questioned about your friends you made certain state- 
ments about Gronau, but they were very inadequate. We know a 
lot more about Gronau. You are to be questioned again immediately 
— come with me.” 

Gronau had indeed been arrested some few days previously. 
I felt certain, however, that my son had been able to warn him. 

I realized from the first question that the authorities didn’t 
know any more than I had told them, and I stuck to my earlier, 
entirely non-committal replies. The proceedings culminated in the 
enquiry as to whether Gronau had not repeatedly voiced critical 
opinions in my house. 

That roused my sense of humour. 

“Certainly,” I replied, “we both voiced exceedingly critical 
opinions — on the miserably inadequate supply of fighter aircraft, 
the only things that would have been any use against bombing 
attacks on German towns.” 

“Were there not occasions, in your house, and in conversation 
with you, when Gronau spoke of the National-Socialist system in 
very derogatory terms?” 

“In my house? What are you thinking of? If he had dared 
an 3 rt:hing of the kind I should have kicked him out then and 
there 1” 

I was taken back to my cell and was left in peace for two months. 

In the Prinz-Albrechtstrasse, the only time we left our cells 
was when we dressed in the morning. Two men at a time were 
taken to the wash-house, while in a recess two more went under 
the cold shower. In spite of the icy water we never missed it, for 
it was our only chance of exchanging a few whispered words. 
The W.C., with its row of four or five seats, offered far less oppor- 
tunity as there were no doors, and a warder patrolled up and 
down the whole time. 



Concentration Camps 433 

The only other occasions on which we left our cells was when we 
were questioned, and when there was an air-raid warning and we 
made for the shelter. When that happened we stood close together 
in a narrow passage, drawn up in two rows along both walls, and 
were absolutely forbidden to whisper or speak to one another. 
Sometimes we might pass a fellow-prisoner on the way to the 
toilet or to a hearing; otherwise these gatherings in the shelter 
were our only opportunities for catching sight of the other inmates 
of the prison. Among them were many faces I knew in connection 
with previously-mentioned events, and others who were unknown 
to me — General Thomas, Dr. Joseph Muller, Herbert Goering, 
General Fromm, Wenzel-Teutschental, Admiral Canaris, Dr. 
Goerdeler, von Schlabrendorf, Striinck, von Hofacker, and others. 

In the shelter, the officials on guard over the two rows of us 
kept a strict look-out to prevent any talking, and it was not easy to 
glean anything from the blank expressions of one’s fellows, 
since each endeavoured to present merely a stony mask. Most of 
them displayed only an iron determination to hold their own in 
the mental and psychological conflict with the Gestapo. 

Of all the faces I saw there none impressed me so painfully as 
those of Canaris and Goerdeler. The last, and comparatively recent, 
time I had seen Goerdeler he was still at liberty, alert and full of 
confidence; now he was in a state of complete collapse. Hia face 
expressed his whole inner disillusion and despair. Canaris was at 
bottom a great patriot; his face, too, revealed how the man’s 
divided outlook, brought about by necessity, had convulsed his 
whole inner nature and shattered his balance. 

I had come to know Goerdeler fairly intimately in 1926 when 
I opened the new Reichsbank building in Konigsberg where he 
was Lord Mayor, and he had delivered the speech of welcome in my 
honour. He had taken the opportunity of drawing attention to the 
very straitened financial circumstances in Kdnigsberg, and the 
miserable housing conditions of the many refugees. After the 
ceremony, Goerdeler had driven me to some of these overcrowded 
districts and had also introduced me to a big municipal gymnasium 
where the “dwellings” for individual families were separated only 
by sacks hung between each. I had experienced a sense of shame at 
the sight of this unhygienic, indecent, unseemly accommodation. 

The town of Konigsberg was Tinder an obligation to contribute 
one hundred and seventy-five thousand marks towards the cost of 
the new Reichsbank building. On my return to Berlin, I had 
suggested to my board that we should cancel tliis debt in order that 
the town might be in a position to provide accommodation for the 
badly-housed inhabitants. Since then, Goerdeler and I had been 



434 Seventy-Six Years 

on friendly terms. When he was Preiskommissar, first under 
Bruning and later under Hitler, our professional activities had also 
brought us into closer touch. 

Goerdeler was entirely opposed to the National-Socialist out- 
look, and as Preiskommissar and Lord Mayor of Leipzig he felt 
it incumbent upon him to carry out his duties to the best of his 
ability in accordance with his own economic conception, which 
was deeply rooted in liberalism. When the Nazi bigwigs took 
advantage of Goerdeler’s absence on leave to remove the Mendels- 
sohn memorial from its site in front of the Gewandhaus, Goerdeler 
resigned his oflBce as Lord Mayor by way of protest. 

The firm of Krupp in Essen then wanted Goerdeler to join their 
board. Herr Krupp von Bohlen felt it his duty to notify Hitler of 
his intention and obtain the Fuhrer’s consent. Hitler refused, and 
the negotiations with Goerdeler were broken off. In order to make 
up for the disappointment to some extent, Krupp sent him on a tour 
abroad with instructions to send him reports on economic and 
business matters. At Goerdeler’s request, I gave him a number of 
letters of introduction in which I recommended him to my friends 
as a reliable informant. 

One morning, soon after his return from abroad, Goerdeler 
turned up at my office in the Reichsbank in a state of great 
perturbation with the news that the Gestapo were after him. 
Something had obviously leaked out from his discussions with my 
London friends and had found its way to the Gestapo as evidence 
against him. He implored me to help him. After obtaining detailed 
information as to the subject-matter and the participants in the 
London conversations, I immediately despatched a carefully 
worded letter to London, which would nevertheless enlighten 
those in the know as to the danger that might possibly threaten 
Goerdeler. 

The London banlting firm in question responded with admirable 
promptitude and equally admirable understanding. People abroad 
had no doubt learnt by that time to read between the lines of that 
sort of letter from the Third Reich, The bank protested emphati- 
cally against the implication that their firm could possibly indulge 
in political activities directed against National-SociaUsm, and 
declared that they would not tolerate any such imputation. The 
reply was so cleverly constructed that I was able to hand it to 
Goerdeler, who was able, with its help, to prevent any further 
investigation by the Gestapo. 

Now, however, fate had overtaken this honest patriot and 
blameless man who was much too decent, too scrupulous and too 
conscientious to start Putschc or revolutions. He leant against the 



Concentration Camps 43^ 

opposite wall in the air-i'aid shelter, pale and shattered, and we 
could do nothing but stare at one another in silence. 

Christinas 1944 and January 1945 passed off quietly apart 
from the constant bombing raids on Berlin which we occasionally 
heard in the distance. Most of the prisoners had received Christ- 
mas parcels from members of their families, and we had called 
“happy” Christmas to each other through the shutters in the doors 
of our cells. To my great joy and surprise the warders, who were 
officially supposed to observe the Yule festival, had put a little 
decorated Christmas tree in the passage, and in our cells we heard 
their rather harsh voices singing ‘‘SHlle Nacht, Heilige Nackt" 
(“ Silent Night, Holy Night”). 

My wife had permission to visit me again on the 3rd February. 
She had walked several miles carrying a heavy parcel of boob, 
food and clean linen. We had had barely twenty minutes together — 
always in the presence of a warder — ^when I was ordered to return 
to my cell immediately. There I learnt that we were to be trans- 
ferred from Ravensbriick that same day. The Russian forces had 
advanced so close to our camp that it seemed advisable to remove 
the political internees. 

My wife waited another hour or so, when she was informed of 
the move and was forbidden to see me again, even for a brief 
moment. She was obliged to drag her entire heavy pacitage home 
again — ^heavier than before, since I had given her my dirty washing. 

Towards midday we were removed in one of the usual prison 
vans which the Berliner has christened “Green Minna”.* We 
stopped at Drdgen where we picked up General von Falken- 
hausen, Gottfried von Bismarck and one or two other internees, 
and drove towards Berlin, 

That was the day — 3rd February 1945 — on which Berlin 
suffered what was perhaps its most severe air raid. Scarcely had 
we reached the edge of the city when we saw burning and smoulder- 
ing ruins everywhere. It is true that since the prison van had only 
some small barred windows in the roof we could see nothing but 
flames and smoke, no streets or houses. We drove, literally, through 
a continuous sea of flame. Every minute the van had to make a 
detour down side streets, and it was a long while before we drew 
up at the well-known building at No. 9, Prinz-Albrechtstrasse. 

Here there was some unloading and reloading, during which we 
learnt that Prinz-Albrechtstrasse had also been bombed to bits 
and part of the building was in flames. Nevertheless, some of us 

* The German equivalent of "Black Maria”. 



436 My First Seventy-Six Years 

were taken down to the cellars while one or two other internees 
were added to our load and tlie police car, packed to capacity, 
drove on through the flames. Finally we landed up in the Police 
Prison in Potsdam. 

This prison was so overcrowded that there was barely room for 
us. Secretary of State Piinder, General von Falkenhausen and I 
were crammed together in a tiny cell, where Piinder and von 
Falkenhausen were able to stretch out on two wooden benches 
placed one on top of the other, while for my bed I used a mattress 
on the floor. 

The remarkable feature was the visit, next morning, of the 
prison Governor, a lieutenant-colonel of police. Pie treated us with 
conspicuous courtesy and informed us that Muller, the Gestapo 
chief, had instructed him to regard us as honorary prisoners. We 
never discovered what that was intended to imply. 

In any case, we were allowed to move about freely in the prison 
yard, both on the following morning and the ensuing days. Josef 
Wagner, a former Silesian Gauleiter who had come with us, was 
visited next day by his wife and was able to talk with her without 
supervision. Wagner told us later that his wife had learnt from the 
Foreign Office that those political prisoners who were still in 
concentration camps were not likely to remain alive, while those 
in prisons could reckon on mild punishments or even on release. 

For twenty-four hours we rejoiced over this news which we 
thought would work out to our advantage, till on the following 
afternoon first I, then von Falkenhausen, were fetched in separate 
cars and taken back to the Prinz-AIbrechtstrasse without, of course, 
any information as to the length of time we should remain 
there. 

The cellar in the Prinz-AIbrechtstrasse looked bleak and hope- 
less in the extreme. Those parts of the building above ground had 
nearly collapsed under the bombing. Light and water no loiter 
functioned. We undressed by the flickering light of a candle-end, 
in spite of which each of us was once again confined in a separate 
cell. For nature’s needs, a pit had been dug in the yard with a 
bar nailed across it. It was here, sitting next to him on the bar, 
that I had my last talk with Dietrich Bonhofer. Our glance fell on 
the barred window of a cellar, behind which a woman wrung her 
hands in despair and implored us, by signs, to help her. 

The next morning we were awakened betimes, and after a scanty 
cold brealefast were packed into a motor bus, through the windows 
of which we could at least see in what direction we were going. 
There were eight internees in all in the bus, and about twelve 
uniformed guards. Among the internees were General Oster, 



Concentration Camps 437 

General Thomas, the Federal Austrian Chancellor Schuschnigg 
with his wife and little four-year-old daughter, Strfinck, General 
Haider and myself. 

The road led southwards along the Autobahn. Food, consisting 
of bread with slices of cold meat, was doled out during the journey. 
At intervals we pulled up to relieve nature; on each occasion two 
guards stood close on either side. 

In the neighbourhood of Ba3U'euth we turned eastwards off the 
Autobahn, but in the gathering dusk were no longer able to tell for 
certain where we were going. Towards eleven o’clock we drew up 
before a camp surrounded with barbed wire, told to get out, and 
once again locked into separate cells. 

I had no idea what kind of a camp this was, but the whole 
creepy atmosphere and the darkness gave me an inkling as to its 
character. Before we were allotted our cells and while we were 
still standing about in the passage I whispered to my neighbour: 

“No one will come out of this camp alive.’’ 

We were in Flossenbiirg Extermination Camp, near Weiden, in 
the Upper Palatinate. 

All of us were now resigned to the end which we knew awaited 
us in this place ; we could see no hope of rescue. 

The camp lay, completely isolated, between rocks and woodland ; 
even by day it was grey and desolate. It appeared to be full. The 
building in which we were housed, and which was obviously 
reserved for important prisoners, did not enable us to learn the 
actual size of the camp. Its character was made clear to us by its 
mere outward appearance and by the screams and shots which we 
heard every night. 

Every day we were allowed to exercise in the yard for twenty 
minutes, each one of us separately. Whenever my turn came in the 
morning I would see, regularly, a procession of stretcher-bearers 
moving away from the camp, dong the end of the cliff towards 
the wood, 'They carried wooden stretchers on which the bodies 
of those who had died or had been murdered during the night 
could be clearly distinguished under the coverings that hid 
them. I have often counted as many as thirty stretchers in a single 
morning. 

One morning an officer, accompanied by two others; burst into 
my cell shouting at me : 

“I don’t suppose you recognize me?’’ 

I did recognize him then: it was Stavitzki, my Gestapo Com- 
missioner from Berlin, He had been appointed commandant of 
Flossenbiirg Camp. More than ever now I knew the fate that 
awaited me. A witness at my denazification proceedings at 



438 My First Seventy-Six Years 

Stuttgart stated that Stavitzki had told him that he had orders to 
shoot me as soon as the American Army approached Flossenbiirg 
Camp. 

It is extraordinarily difficult to put into words the inner sensa- 
tion that sustained me, and probably also my fellow-prisoners, 
throughout those two months in Flossenbiirg, during every hour 
of which we had to reckon with death. Many persons, as a result of 
scientific observation, feel they have no need to bother overmuch 
about the phenomenon of life. The problem of death leads even 
the most materialistic of men in the direction of the supersensual, 
the supernatural. 

So I too reviewed my whole life in retrospect. Many were the 
sins of omission and commission that came into my mind. Against 
these I could only set the desire I had always felt, and had tried to 
put into practice, to do and to promote good wherever I had the 
opportunity. A few verses in wluch I summarized my impressions 
in the Extermination Camp at Flossenbiirg may express this better 
than mere prose : 

When daytime’s shadows in dusk are merging 
And dusk in turn has been put to flight, 

The long dark hours on thy soul converging 
Haunt and mock thee throughout the night. 

Every oppressive thought and sensation 
Weighs on thee, soul, with burdensome themes ; 
Doubts, misgivings, in nightmare rotation 
Harass thee still, half-aw^e, half in dreams. 

“Yesterday — ^this day — did I do rightly 
Such-and-such action or course to pursue?” 

As a beast of prey hunts his quarry nightly, 
Self-reproaches torment thee anew. 

Rest thee, quiet thee, my soul; the terror 
Will fade with the dawning of each new day; 

No man is free from sin and from error 
As he battles along life’s way. 

’Tis not thus the Eternal surveys thee — 

By distance acliieved and unclimbed ascent: 

By these alone will His mercy appraise thee — 

What thine endeavour, and what thine intent. 

For the rest, my thoughts were first and foremost with my wife 
and children ; my death would cause them profound grief and leave 



439 


Concentration Camps 

them in direst poverty. My children hardly realized my existence 
— they were two and a half and one and a quarter years old when 
I had been forced to leave them. So I made up my mind to set 
down some recollections which would emphasize the kindly and 
pleasant aspects of my life : I wanted to make them happy, even in 
the midst of their sorrow. 

On the evening of the 8th April, to my intense astonishment, I 
was ordered to get ready for a journey the very first thing die 
following morning. I learnt that some others, too, were to be moved. 
None of us knew of course, where the “journey” would take us 
and whether it would lead to the expected end. Nevertheless the 
order gave me back the first glimmer of hope. 

Before daybreak General Thomas, General Haider, Dr. Schusch- 
nigg, his wife and child and I were pushed inside “Green Minna”. 
The behaviour of the guard led us to assume that the military 
situation must have deteriorated to an extraordinary degree. The 
foreign armies must have advanced considerably. Our guards were 
very uneasy. 

We stopped first near Straubing where we fed, and where 
several internees from a local camp were added to our number. 
The van was by now chock-full with persons and luggage. 

Among the newcomers was General von Falkenhausen, the two 
Britishers, Best and Stevens, who had been kidnapped by the 
Gestapo at Venloo on the Dutch-German frontier, and a nephew 
of Molotov. 

Late that evening we arrived in the courtyard of Dachau Camp. 
We had to wait several hours in the prison van, as the camp com- 
mandant had obviously received no instructions and it was very 
difficult to find accommodation for us. When at last we were 
unloaded from the van, the lieutenant-colonel in command — 
a master craftsman from Munich — ^received us with the utmost 
courtesy. He apologized for being unable to find us suitable 
accommodation; unfortunately we would have to make do with 
whatever room was available. 

This attitude did much to raise our hopes. We were housed in 
cells, either alone or in pairs ; the doors stood open on to the corri- 
dor by day and night, so that we could visit one another at any 
time. By day we were allowed to stroll about the yard unhindered. 
We had the impression that this was indeed a camp for important 
prisoners, and we saw that our building was entirely separate from 
the others. 

Here I met Niemoller, my old pastor from Dahlem; I met 
Neuhausler, the future suflFragan bishop ; Fritz Thyssen and his 
wife, L6on Blum and his wife, and a whole crowd of Britishers, 



44° My First Seventy-Six Years 

Frenchmen, Greeks, Slovaks, Swedes, Dutchmen, Austrians, 
many of whom I knew personally. 

The treatment and the food were good. The Schuschnigg 
family installed their radio, and we listened to the news regularly 
every afternoon over coffee, which Frau Schuschnigg made in the 
fairly large cell that had been prepared for them. In this way we 
were soon au fait with the military situation and discovered the 
reason for the accommodating behaviour of the guards. 

These guards consisted for the most part of regular old soldiers, 
only a small proportion being Gestapo men; and they were ob- 
viously keen to pi'ovide themselves with some “good references” 
and make their escape when the final collapse should come — ^which 
not even the biggest fool could by now fail to foresee. 

But we were particularly depressed on account of the uncertainty 
as to the fate of our comrades in Flossenbiirg. Not until much later 
did we learn that, on the same morning on which we four were 
transferred, the four others ended their lives on the gallows, among 
them my close friends Striinck and Oster. When the news reached 
me, I recalled with a shudder the courtyard at Flossenbiirg, at the 
end of which I had seen the gallows set up in a shanty which had 
been temporarily left open. 

We were in Dachau for about a fortnight; then our way led 
further south through the ruined city of Munich, via Kufstein 
to the hutments camp at Reichenau near Innsbruck. Here, in addi- 
tion to ourselves, other vehicles with internees arrived with 
several women and some children, the so-called Sippenhaftlinge" 
(prisoners’ kinsfolk), i.e. wives, children and distant relations of 
persons who had already been put to death or were awaiting 
prosecution. Among them were the families of Lindemann, 
Goerdeler, Hammerstein, Plettenburg, Vermehren, and many 
others. In this place, we ‘'Prominenten" (important prisoners) 
increased our total strength to one hundred and thirty. After 
three days we were despatched in motor buses to Niederndorf , just 
before Toblach in the Pustertal, 

Here we waited for the Americans. 



Part Seven 

ARRAIGNED BEFORE THE 
WORLD 


IS 



CHAPTER FIFTY-FIVE 


In American Hands 

O UR final release from the Gestapo in the Poster Valley 
enabled us once again to breathe freely. Up to the last 
moment there was always the chance of a shot in the neck. 
Now, however, we were that much further on towards our return 
to civilian life. At least, so we imagined. 

We had been moved from Niederndorf to the Hotel Pragser 
Wildsee ; there, an American General assured us that he brought 
us liberty. The American front-line soldiers who now took charge 
of us were kindness itself. They provided us with food, smokes, 
and supplemented our meagre luggage with clothing. 

In the evening we sat in the hotel lounge — ^it was almost 
unbelievable after our periods of captivity— where Isa Vermehren 
delighted us with her singing. On Sundays we attended Catholic 
or Evangelical divine service. In the daytime we revelled in the 
spring sunshine and went for walks in the wonderful woods above 
the Wildsee. In spite of the distressing news of the collapse at 
home, we began to revive. The landlady of the Pragser Wildsee 
prepared our favourite dishes, and her cellars produced many a 
delicious drink. 

This marvellous state of things lasted but a few days. AH of a 
sudden we were again "transhipped”, and driven to Verona via 
Toblach in a column of about forty cars. We were told that we 
were being taken from the front to the base where we were to be 
set at liberty. At Verona we were given rooms in the Golden Dove 
Hotel and treated just like any other visitors. When I arrived at 
the same hotel in i9Si> they recognized me immediately and 
remembered the compulsory but none the less very pleasant 
visit. 

The General realized that in releasing us he had released a 
group of determined opponents of Hitler and the Nazi regime who 
were to be treated to a certain extent as guests of honour. We 
strolled about the streets, admired the various monuments and 
buildings and made some small purchases with the money with 
which our hosts at Niederndorf — ^and especially Frau Maria 
Senftner, the landlady of the Star Hotel — ^had so kindly provided 
us. 



In American. Hands 443 

Next morning we were driven to the airfield, embarked in 
three ’planes and flown non-stop towards Naples. As we drew near 
Rome our pilots made a wide sweep over the city and we had an 
overwhelmingly beautiful view in most marvellous weather — a. 
unique experience for us who, only recently, had been awaiting 
death in Flossenbiirg Camp, our only view the muddy courtyard 
and the gallows in the tumbledown shanty. 

In Naples the scene underwent a distinct change. We were 
received by American Base officers who did not impress us as being 
at all up to front-line standard; taken to the Hotel Terminus, and 
informed that we were no longer to consider ourselves as guests 
and were not to leave either our rooms or the hotel. Our personal 
treatment was brusque, not to say churlish. We were conscious 
of an atmosphere which obviously owed its origin to German 
emigrant circles. 

We had defied Hitler at the risk of our lives. Now, without 
further ado, we were lumped together with the guilty ones of the 
Hitler regime. 

During those days I experienced for the first time the vast 
amount of misunderstanding with which I was to have to contend 
for years to come. Since we belonged to the Opposition, which 
had resisted Hitler, all of us, including myself, had thought we were 
to be restored to freedom, as the American General had told us. 
That, however, had obviously been a misunderstanding on his 
part and certainly an error on ours. 

In spite of my flat refusal to co-operate with Hitler, economically 
or financially, since 1937 ; in spite of my attempts, first in 1938 and 
on several later occasions, to brit^ about Hitler’s dowiifaU; in 
spite of the fact that owing to my continued opposition to Hitler’s 
war policy I had been imprisoned and in constant danger of execu- 
tion, I was now to go through it all again in an American prisorij. 

Our essential luggage was not restored to us for weeks; later we 
found that a great part of it had disappeared and we did not even 
receive our toilet things. One of our number had his money 
openly pinched on arrivd ; the keys of our luggage were taken from 
us and the contents turned upside-down in our absence. At night 
we had to sleep with the electric light on and there was always a 
guard in the room. We were not allowed to write to our families, 
^though we had been out of touch with them for months. 

I am not complaining about all this; but I am forced to the 
conclusion that directly it is let loose the beast in man is the same 
eveiywhere and at all times. No one should presume to set himself 
up above his fellows. The moral defaming of one’s enemies, which 



444 Seventy-Six Years 

has once more become a universal feature in modern politics, is 
worse than any medieval inquisition. 

Our culture has not grown any better, although our civilization 
has made such tremendous progress. We have successfully achieved 
victory over matter ; our intellect has triumphed ; but our soul has 
become atrophied in the process. Even our talks Tvith fellow- 
inmates in prison camps turned only on technical subjects, on the 
conquest of space and time, the improvement of the outward 
amenities of life, and, by no means last, on the further scientific 
development of war weapons and war machines which, for the 
second time within a generation, have cost the world a dozen 
million lives. 

Many of my companions in the camp at Naples were generals 
of the defeated German armies. Some of my more intimate friends 
and I asked the camp authorities for divine service on Sunday, 
and observed how most of the generals ostentatiously absented 
themselves. Those were the men who, for six long years, had 
swallowed every one of Hitler’s crazy military suggestions and 
carried them out — often against their better knowledge — ^without 
thought for the millions of human lives sacrificed to such madness. 
Later, the inmates of Kransberg Camp in the Taunus were for 
the most part scientists and armaments technicians, and it was con- 
temptible to see how the victors took advantage of the prisoners’ 
position to pick their brains for information on military and indus- 
trial matters. It was a scientific plundering of the helpless, an 
intellectual torture-chamber. 

Humanity learnt nothing from the First World War. How about 
the lesson of the Second War? No-one seems to realize that both 
these -wars represented a colossal moral defeat for Western 
Christendom. I certainly consider that a great share of the blame 
rests on the German nation, but the root cause of the evil lay 
elsewhere. The dictated Treaty of Versailles did not bring peace. 
Its determining factor was not the seizure of land and property; 
it was the policy of moral obloquy — harking back to the period of 
the worst religious wars — by which the enemy was branded as a 
criminal to be exterminated at all costs. The worst feature of such 
a policy of defamation is that it cannot be rescinded without the 
d^amers themselves standing accused of criminal and wanton 
inhumanity. 

The French Revolution, in relation to its own period, was no 
less murderous and horrible than the Gestapo system; but it 
never occurred to anyone at the time to want to expel the entire 
French people from tiie human community. Germany entered the 
First World War with dean hands, yet after her defeat she was 



In American Hands 445 

outlawed and the German people treated as something outside the 
pale. 

The defamatory policy of Versailles was solely responsible for 
driving the German people into a condition of despair that played 
into Hitler’s hands and enabled him to seize supreme power. 

Victors and vanquished alike were lacking in moral depth. They 
had become worshippers at the shrine of mechanical power, of 
intellectual cleverness, contemptuous and ignorant of that spiritual 
force which will one day triumph over them. For I am firmly con- 
vinced that out of all the misery of these two wars there will 
emerge a new moral orientation for humanity which will be 
stronger than any technical skill. 

The fii-st enquiry by Allied officers was held at Anacapri, where 
we were first of all transfered from Naples. I was struck by the 
fact that at this enquiry I and a few others were passed over. Most 
of our crowd succeeded in obtaining their complete release and, 
after complying with a number of formalities, were allowed to 
return home. 

My own case and that of eight others — ^including Generals 
Thomas and Haider — ^was a different story. After only three days 
at Anacapri we were taken without any explanation to the afore- 
mentioned prison Camp at Aversa near Naples, where some ten 
thousand German P.o.W’s were being held. Here we were housed 
in a hut separated from the rest of the camp by barbed wire ; with 
us in the same room were twenty or thirty political prisoners, 
among them German and Italian generals. 

I was highly indignant at this renewed imprisonment and sent 
repeated petitions, letters and complaints to the authorities con- 
cerned, aU of which were studiously ignored. Only the wonderful 
summer weather and the patience we had learned during our 
earlier captivity helped us to hold out. 

At the end of about four weeks some of us — ^including Haider, 
Thomas and myself— were once again loaded into a ’plane like so 
many unaddressed parcels. With us were other internees, among 
whom we encountered Fritz Thyssen. We realized at last that the 
Allies had some political objective in view, which made them 
anxious to brand us as “ criminals of the Hitler regime ”, The Trial 
of War Criminals had already been planned, and it was obviously 
essential for the purposes of that trial that prominent economists 
and business-men should be numbered among the accused. So 
far as I was concerned, I knew that from the beginning of the 
war the American Government had been kept minutely informed 
as to my anti-Hitler attitude. My whole attitude to the present 



446 My First Seventy-Six Years 

circumstances was based on American cognizance of this fact. I 
looked forward fearlessly to further developments, glad, if anything, 
that matters were moving. 

After a wonderful flight from Naples over the Gulf of Liguria 
and its islands towards the French coast, through a terrific storm 
in the South of France, we landed finally at Orly airfield near Paris, 
about twenty internees in all. We were taken at first to a small 
private chdteau at Chesnay, near Versailles, where the bedroom 
windows were barricaded with barbed wire and the beds none too 
comfortable. But there was a very fine, though uncultivated, park 
in which we were allowed to walk and where we met a goodly 
number of other German internees, among them Heinckel, the 
aircraft manufacturer, Speer, tlie former Minister and various 
members of I.G. Farbenindustrie. 

We remained here only a few days. Then all of us — ^men and 
women internees who must have been housed together somewhere 
nearby — ^werc packed into goods vans and driven off in an easterly 
direction. It gave me a queer feeling when we pulled up for a 
brief halt in the great place in front of the Palace of Versailles. I 
thought of the many times in my life that I had bent my steps in 
this direction and the many delightful recollections I had of the 
hotels, inns, streets and parks of Versailles and Paris. Now I was 
a prisoner, herded in a goods van, poorly clad (I was still wearing 
the same suit in which I was arrested under Hitler on the 23rd 
April 1944). My supply of underlinen, too, was no better or more 
plentiful. 

From the signposts we passed on our eastward journey from 
Paris we gathered that we were making for Metz. Towards evening 
we pulled up at a big deserted gravel-pit and spent the night 
there, sleeping in the open on camp beds, men and women in 
separate groups . The gravel-pit was surrounded by wild roses in full 
bloom. Above us the night sky spread its pleasant summer warmth. 
Small camp-fires were lighted, I-Iadwenot been prisoners the whole 
thing would have resembled some marvellous summer outing. 

After a delicious brealcfast at Metz we drove through Ludwigs- 
hafen — ^which had been bombed to bits— joined the Franltfurt 
Autobahn, and arrived in the evening at an old castle situated 
above Oberursel in the Taunus Mountains. Kransberg is the name 
of the place which was formerly the property of tlie von Biegeleben 
family from Hessen. During the war the castle had been chosen 
by Hermann Goering as a kind of Western headquarters for the 
Luftwaffe and done up for the purpose by Speer, who had added 
a large new part containing several rooms and a great hall with a 
wonderful open hearth. 



In American Hands 44^ 

Now the castle was evidently being used as a so-called Promin- 
entenlager or camp for the V.I.P.S, particularly technicians and 
scientists. At times it may have housed a total of forty or fifty 
internees. Our quarters were frequently changed which made our 
stay there especially interesting for me. Occasionally a number of 
prisoners would be sent to England or America; sometimes 
they came back, sometimes they didn’t. Others left Kransberg 
for good. New arrivals were frequent. In short, there was a con- 
tinually changing sequence of encounters with important men, 
nearly all of whom I Icnew as part of the economic or scientific life 
of Germany. 

From the outward point of view, the time I spent in this camp 
from the beginning of July to the end of September was not un- 
pleasant. The rooms were clean. The older internees, such as 
Fritz Thyssen and myself, were given single rooms, while the 
younger ones slept in one room which, however, was large enough 
for comfort. The food might be compared to that of a well-run 
hotel, obviously because, while the management of Kransberg was 
in British hands, the provisioning was done by the Americans, of 
whose large-scale ideas on all matters concerning food the British 
took full advantage. The meals were excellent, we were given 
chocolate, fruit, oranges, tobacco and other amenities as much as we 
wanted; we spent our time playing cards, attending lectures, talks 
and discussions which we arranged in the big hall. In the da^me, 
we went for walks in the small but well-planned garden belonging 
to the castle. But we were still prisoners. 

Nor could the comforts of Kransberg allay the profound anxiety 
as to my family which I had experienced ever since Flossenbiirg. 
It was there that, after prolonged delay, I had received the last 
news of my wife, which was still written from our country home 
near Berlin. Since then, i.e. since March 1945 , 1 had had no news 
of any kind. I had no idea if my femily were still alive, where they 
were, what might have happened to them after the Russians had 
taken Berlin. Reports received via the radio or in secret, indirect 
ways were in the highest degree disquieting. 

Immediately on arriving at Kransberg I endeavoured to get into 
touch with my wife. The British lieutenant-colonel promised to 
forward my letter. Donald Heath, my old acquaintance from the 
American Embassy in Berlin, promised me most solemnly that he 
would use his diplomatic coimections to send news of me to my 
wife. He was now a member of the garrison administration and 
had once sent for me to attend a hearing at Frankfurt. Neither of 
them kept their promise. Yet Donald Heath was the man in the 



448 My First Seventy-Six Years 

American Embassy who, up to the outbreak of war, was constantly 
at my house seeking information and was always made welcome 
by me. He, too, was well aware of my hostile attitude to the war. 

At last, towards the middle of August, I received news through 
a channel which we are accustomed to describe by the one word 
“underground”. The housework at Kransberg was done by a 
number of charwomen who also washed our underclothes and 
came up to the castle from the village every morning. One day, one 
of these women managed to get word to me on the quiet to come to 
the lavatory. There she handed me a box of cigars and a letter, 
both of which had been Iwought to the village of Kransberg by a 
friend and delivered to the woman. Since the collapse of Germany 
this friend had been living in my married daughter’s little home- 
stead in Bavaria, My daughter liad learnt that I was in Kransberg 
Castle, and in the letter which accompanied the cigars she told me 
that the two small children of my second marriage were staying 
with our nurse’s mother on Liineburg Heath. Of my wife herself 
my daughter could tell me nothing. 

On the last occasion we had seen each other I had advised my 
wife to remain in our country home at Gtihlen and endeavour to 
preserve it for us against the time when the war should be over. 
My mind was still full of the out-of-date ideas of World War I 
when we still entertained respect for other folks’ property. In any 
case I could not do otherwise than assume, srfter reading my 
daughter’s letter, that my wife had remmned at Guhlen. In the 
meantime, enough reports had reached us about the behaviour 
of the Russians towards German women to arouse the greatest 
anxiety as to my wife’s fate. 

Then, towards the end of August, Dr. Brandt, one of Hitler’s 
personal physicians, arrived at Kransberg. Shortly before he was 
arrested by the Americans he had had a conversation with my 
wife and was at least able to reassure me that she was alive. My 
first direct news from my wife did not reach me until much later 
when I was already in prison in Nurnberg. For nearly nine months 
I remained in ignorance of all she had endured. 



CHAPTER FIFTY-SIX 


Nurnherg Prison 

S o far as humane treatment of prisoners was concerned, the 
Niirnberg prison was the worst. Not on account of the 
accommodation or the food — ^both were much the same as in 
the other prisons — but on account of the actual personal treatment. 
Here we were spoken to not as, prisoners undergoing examination 
but as condemned criminals. All the regulations proclaimed a 
grotesquely bureaucratic narrow-mindedness which surpassed 
even the treatment I had experienced in Hitler’s concentration 
camps. 

Among the Niirnberg prisoners there were indeed some crim- 
inal elements, but there, were also many honourable men, some 
of whom had been caught up in the Hitler system against their will, 
or had even defied Hitler at the risk of their lives. 

In Kransberg, at the end of August, we heard over the radio 
which Germans were to appear before the International Military 
Tribunal at the forthcoming War Criminal trials. To my great 
surprise I heard my name included among others. Besides Speer 
and myself none of the accused were in Kransberg. Up to now we 
had both assumed that no charge would be preferred against us. 

While in Kransberg I had been questioned on several occasions 
by British and American officers, among them an American Jew 
who went out of his way to be as beastly as possible. Major Tilley, 
a Britisher, conducted the enquiry searclungly enough but on 
strictly correct lines. At the end of the first hearing he ordered me 
to set down in writing a full and coherent account of my attitude 
towards Hitler. After he had read it he opened the second enquiry, 
saying: 

"At our first encounter, Herr Schacht, my feeling towards you 
was one of most profound mistrust. Since reading your statement 
I have completely changed my opinion.” 

When I was moved from Kransberg in mid-September and our 
fellow-prisoners gathered round to say good-bye. Major Tilley 
came up to me, held out his hand, and said : 

"I hope I shall see you again.” 

By way of a foretaste of Niirnberg, I was taken for three weeks 
to a camp near Oberursel, generally and appropriately knovm as 



450 My First Seventy-Six Years 

“The Cage”. The cells were, in fact, just cages. The benches 
were simply wooden boards covered with a blanket. We had two 
meals a day — one in the morning, the other at four in the after- 
noon, consisting for the most part of half-cookcd peas which were 
very indigestible. Exercise in the open air was limited to ten min- 
utes a day. There was no reading matter of any kind. The condi- 
tions were the most revolting I had ever experienced in any of my 
prisons. 

While here I received two visits, both worthy of note. The 
first was from a former colleague on the BZ am Mittag, who 
obviously wanted to write up an interesting interview. He insisted 
that he had seen me on a former occasion in Berlin and mani- 
fested his satisfaction at meeting me again in these surroundings. 
I gave him pretty short shrift. The second visit was distinctly 
more agreeable. Mr. Pool, one of the former members of the 
American Embassy in Berlin, came to the camp on purpose to 
enquire how I was faring. We revived mutual recollections of 
Berlin and Paris days, and parted in a very friendly spirit. 

Next day, as a result of this visit, I was given a proper bed with a 
mattress, and the following Sunday morning two young American 
lieutenants came and took me for a walk in the Taunus woods 
surrounding the camp. 

At the end of three weelcs I was bundled into a car with General 
Warlimont beside me and Schwartz, the Treasurer of j,thc 
N.S.D.A.P., in front. Once again wc were not told the name of our 
destination. Only from the signposts did we gather any indication 
as to our direction, and in the afternoon we drew up at the Justice 
Prison at Niirnberg. 

Even on my admittance to the Niirnberg prison I was treated 
most discourteously by the American Prison Governor, Colonel 
Andrus. I stated that I was neither a criminal nor a convict 
but a prisoner awaiting examination, and furthermore that I was 
not guilty. He replied that he couldn’t care less. I didn’t get so 
much as a glimpse of any of the other prisoners when we arrived 
but, like them, I was locked into a separate cell. Colonel Andrus 
continued to reveal himself as a thorouglJy unpleasant man, as 
pernickety as a subaltern. 

The prison regulations which were drummed into us went so 
far as to forbid standing on the chair in case we wanted to look out 
of the barred window set just under the ceiling. This was intended 
to prevent any signal being given to anyone outside. The cells 
were originally furnished with solid, firm tables at which one could 
write. But such tables could have been used to reach up to the 
window panes. So one day the solid, firm tables were taten away 



Numberg Prison 451 

and replaced by unsteady wooden erections of thin lath, with a 
thin sheet of cardboard nailed on top. Writing at this table was 
sheer torment, for it wobbled continually; yet in the eleven 
montlis that the trial lasted, we had a lot of writing to do, if only 
to supply regular information for the defence. 

There was a W.C. in the cell. We were taken outside to wash 
and once a week for a bath. Books could be obtained from the 
prison library, but as there was almost nothing but National- 
Socialist literature which those responsible had evidently forgotten 
to throw away, I usually went without. The wooden bench that 
served as bed was so placed that the electric light from the door 
shone right into my face. 

On one occasion the guard roused me in the middle of the night 
and ordered me to lie facing the light instead of with my back to it. 
I told him that I could not possibly lie on the same side or on my 
back all night. When the fellow refused to be satisfied, I went for 
him and told him to send for the officer on duty. Shortly after- 
wards, I heard an argument between the guard and the officer 
outside my door, and was left in. peace. 

The food was plentiful but very dull — ^beans at midday and peas 
in the evening, the next day peas at midday and beans in the 
evening, which I found impossible. Sometimes there would be 
dried egg powder in the form of scrambled eggs at every meal for 
weeks on end, tmtil finally I couldn’t bear the sight of it, let done 
the smell or the taste. The “dinner service” consisted as usual of a 
tin bowl and tin spoon. 

Secure in the possession of a perfectly clear conscience, I pro- 
tested in the strongest possible terms while in Nfirnberg against 
any and every form of unjust treatment. After my acquittal I was 
described In an English newspaper as the most refractory of dl the 
Nurnberg prisoners, and I am rather proud of it. 

One day Colonel Andrus came into my cell, and announced 
that I was to be deprived of my ddly exercise in the fcourtyard for 
a week, by way of punishment. On my asking the reason he replied : 

“For unco-operativeness,” 

To which I immediately answered; 

“I have no desire to co-operate with you. Colonel.” 

On another occasion, I withstood repeated attempts by journa- 
lists to photograph me. The first time I did not realize that I had 
been snapped at dinner in the very act of conveying a spoonful of 
food from the tin bowl to my wide-open mouth. This picture was 
reproduced many times in the intemationd Press, and as none of 
us wore collars and we dl appeared somewhat unkempt, it was 
riot very flattering. 



452 My First Seventy-Six Years 

One day the journalists renewed their efforts and I told the 
American reporter that I preferred not to be photographed while 
eating. He went away, but notwithstanding my request returned 
to the charge in a minute or so. I called out to him to shut up ; if he 
tried it again he’d get what was coming to him. After a few mo- 
ments he made a third attempt; without more ado I seized my mug 
which was full of coffee and flung the contents at his head. 

The effect was astounding. The American guards stationed 
behind each one of us burst into roars of laughter at this success- 
ful attack on the “freedom of the Press”, and the photographer 
beat a hasty retreat. 

When, a week later, I was brought up for disciplinary action on 
account of my conduct, the proceedings were short and sharp. 

“You have insulted an American military uniform.” 

“The photographer was not in Ameriean military uniform; he 
was wearing a suit like yours. Colonel, but without any badges of 
rank.” 

There was nothing more to be said. Nevertheless, I did not go 
unpunished. My coffee ration was withdrawn. I have never had so 
many offers of coffee as in the days immediately following. Nearly 
every orderly, whether German or American, who passed the open 
shutter of my door asked if I would like some coffee. 

By the time I landed in Numberg prison for my trial by the 
International Military Tribunal I had completed a total of sixteen 
months’ captivity, and been in more than a dozen prisons. 

In such conditions, one’s chief need is for spiritual comfort and 
encouragement. It is true that there was a German-speaking 
American minister who looked after the prisoners, but I longed for 
a German pastor. It was not so much a questioil of services and 
sermon as of the opportunity to unburden the mind on spiritual 
matters. Our request for a German pastor was turned down, 
although the American clergyman himself gave it his express 
support. He himself felt that he needed the assistance of a German 
confrire. He was obliged to read his sermon, since his knowledge 
of German was not sufficient to enable him to speak extempore, 
and it was therefore all the more difficult for him to carry on a 
pastoral conversation with any one of us. 

Nevertheless there was a most moving quality in Pastor Gericke’s 
zeal and devotion to his task. He was a dear, good, thoroughly well- 
intentioned man, possessed of great personal tact, and I hope, if 
ever he reads these lines, that he will rest assured of the gratitude 
of us all. 

The Nurnberg prison was a comparatively modem structure 



NUmberg Prism 453 

laid out in the shape of a star. From a circular centre five wings 
had been built out, separated from one another as in a mill and 
traversed down the middle by a corridor about sixteen feet wide. 
The separate cells were situated down the length of the building 
in three storeys, connected by narrow iron spiral staircases. 
There were about twenty cells adjoining each other on each side 
of the corridor. The separate wings were occupied by different 
categories of prisoners. In my wing the most important ones were 
housed on the ground floor, and on the upper floors were others 
charged with criminal practices. Another wing, in which I later 
spent five weeks as witness in the Flick trial, was used as a so- 
called Witnesses' wing. Here the internees were allowed to 
communicate with each other. 

With us, on the other hand, the strictest isolation prevailed. 
When we wanted to wash each one of us was accompanied separ- 
ately by a warder. The bathrooms were in the cellar and we had to 
proceed to the individual cubicles in single file. 

Our only chance of meeting other prisoners was when we were 
escorted into the great hall where the judicial proceedings took 
place, or into the yard for exercise. 



CHAPTER FIFTY-SEVEN 


The Prisoners 

O N the 30th October 1945, the Bill of Indictment was handed 
to me by an American major. From it I ascertained that 
the indictment was divided into four headings ; the first 
being ‘ ‘ Taking part in the Conspiracy to bring aboiit the War ' the 
second "Taking part in Measures preparatory to the said War”, 
the third "Perpetration of Crimes during the War”, and the 
fourth "Crimes against Humanity”. 

From this indictment I learnt for the first time of the monstrous 
crimes committed against humanity, above all against the Jews, by 
Hitler himself and by his orders. 

The indictment was not merely a general one : it was also drawn 
up in detail for each of the accused, informing him on which of 
the four counts he was charged. Most of them were arraigned 
on all four counts. Numbers ^rce and four — “War Crimes” and 
"Crimes against Humanity” — did not apply in my case. I was 
charged only with "War Conspiracy ’ ’ and ‘ ‘ Preparations for War .” 

To both charges I could reply with a clear conscience. X knew 
that innumerable proofs existed that I had neither planned nor 
prepared for war but, on the contrary, had striven to prevent it. 
From that moment I knew that, provided judgment were given 
according to law and justice and not according to hatred and pas- 
sion, the whole of the Niirnberg proceedings must result in my 
being acquitted. Fortunately, my faith was justified. 

Among the accused were several whoih I knew to be my avowed 
enemies. But there were also others of whom I knew that, though 
they had been weak, they were inwardly opposed to the Hitler 
rdgime and could be regarded as thoroughly decent people in 
ordinary life. 

In the eleven months of the trial I had ample opportunity for 
speech with my fellow-prisoners in the dock in intervals between 
cross-examinations, as well as at midday dinner and during the 
daily walks — except for two months when exercise in the yard was 
prohibited. With those whom I knew to be not merely guilty but 
also inimically disposed towards me I never exchanged a single 
word during the whole of those eleven months. I maintained con- 
tact with Frick, Donitz, von Neurath, Fiitzsche, Raeder, von 



The Prisoners 


455 

Papen and Speer. Those with whom I talked most were Funk, who 
sat next to me in the dock, and von Papen, with both of whom an 
acquaintanceship of long standing had ripened into intimacy. 

So far as I was concerned, Goering’s case presented the greatest 
difficulty. For a long while many had hoped that Goering would 
find and pursue the path of political moderation. At the beginning 
of the Hitler regime I too had shared that hope. Goering had more 
than once manifested a tendency in that direction. His criticism 
of Hitler prior to the latter’s seizure of power was in striking con- 
trast to his subsequent ostentatious display of paladinesque fealty. 
When he realized that only through Hitler could he satisfy his own 
lust for power and wealth did he surpass himself in protestations 
of loyally. 

At the Niirnberg trial Goering displayed great courage, both in 
his behaviour and his half-audible exclamations. In the witness- 
box he manifested such superior intelligence and quickness at 
repartee, together with an outward appearance of such surpassing 
dignity, that even the Prosecution could not fail to be impressed. 

Not even this outward appearance, however, could disguise the 
fact that Goering had committed blackmail, murder, robbery, 
theft and numbers of similar crimes. Personally I have always 
looked upon Goering as the worst among the accused on account of 
his decent origin and comfortable circumstances. In contrast to 
Goering, Streicher appeared to me to be a pathological mono- 
maniac and Kaltenbrunner a callous fanatic. 

From a human point of view Rudolf Hess always seemed to be 
a decent character motivated by the best intentions. He never 
knowingly took part in or consented to any crime. But that he was 
not fully responsible for his conduct was confirmed throughout 
the whole course of the trial. Eventually the great question turned 
on whether Hess could be regarded as a case of forty-nine or fifty- 
one per cent, retarded intelligence. In prison his attitude was one 
of complete apathy and isolation. 

For Ribbentrop there was only one excuse, even according 
to the most charitable estimation — ^his extraordinary stupidity. 
Every quality essential in a diplomat — ^intelligence, tact, faultless 
manners, general affability — ^he lacked. 

The general opinion of Keitel was, so to apeak, unanimous: 
he was his master’s unthinking and irresponsible yes-man. On a 
single occasion only in Niirnberg I asked him whether it was a 
fact that after my dismissal in January 1943 he had forbidden his 
officers to have myiidng to do with me. Keitel flatly denied it, 
although many of the officers affected by the order had. told me 
of it at the time. 



456 My First Seventy-Six Years 

Number Four in the dock was Alfred Rosenberg who, with his 
usual reserve, kept himself to himself during the whole of the 
Niirnberg proceedings and clung to his philosophic fantasies right 
up to the moment of his execution. 

A double cell on the first floor had been fitted up as a little chapel 
so that we might attend church. Neither Rosenberg, Streicher nor 
Hess ever came to a service. During the days I remained in prison 
after my acquittal I saw the American Evangelical pastor talk- 
ing earnestly to Rosenberg in the corridor, and being coldly and 
energetically repulsed. 

Goering was one of the most zealous attendants at the services, 
though the rest of us were also glad of them: partly owing to 
religious conviction, partly owing to a warm feeling for the 
minister, partly because they afforded a good opportunity for 
mutual understanding. 

From Catholic fellow-captives I heard that their priest, Father 
Sixtus, spent himself most devotedly for the prisoners under his 
care and more than once managed to help them, by many ways not 
strictly forbidden, in contacting their families — ^which our good 
Pastor Gerickc did not dare to attempt. But in our view Father 
Sixtus’ greatest achievement was with Frank, the Governor of 
Poland who, more deeply implicated than anyone in the Jewish 
murders, was reduced by this Catholic priest to a state of abject 
penitence. 

Funk, my successor as President of the Reichsbank, cut a pretty 
poor figure. He was a decent enough fellow and not stupid, but he 
was lazy and lacking in apprehension of the duties entrusted to him. 
I am convinced that there were many matters of which he had no 
knowledge whatever. He was a first-rate connoisseur of music and 
his preferences were decidedly for the artistic and literary. Un- 
fortunately, like so many of the Party leaders, he was strongly 
addicted to alcohol. In the witness-box his defence was weak 
and lachrymose. 

Donitz and Raeder, as well as Jodi, referred to their military 
duties as the main reason for their conduct. 1 am quite certain that 
were they to be tried again today, the result would be different 
from what it was in that first period shortly after the end of the 
war. 

Schirach, too, created a characteristic impression of immaturity 
and indetermination. 

Papen, like myself, was arraigned only on the first and second 
counts. But in view of the fact tihat three of his closest colleagues 
had been murdered by Hitler while he had maintained a passive 
attitude, he coxild not escape severe moral censure. 



The Prisoners 


457 

Seyss-Inquart and Speer, neither of them real villains, con- 
ducted their defence veiy clumsily. Speer’s final statements dealt 
with the problem that must have been exercising his mind for 
some time, namely, how had it been possible for the Dictator to 
keep the German people in complete ignorance on the one hand, 
and on the other hand to ensure the execution of his plans and 
decisions by the issue of direct orders to the appropriate persons, 
even in the most subordinate posts. These observations by Speer 
on the influence of modern technique in communications and 
intelligence service are undoubtedly worthy of consideration. 

“Hans Fritzsche Speaking”* was probably included among the 
important prisoners because — ^fortunately for him — ^the Russians 
had obviously desired to contribute to their number. As a result, 
Fritzsche had been spared the fate that had confronted him during 
his imprisonment in the Lubianka. 

Two of the chief accused never appeared in the dock at Niirn- 
berg. Old Krupp von Bohlen lay unconscious on what was to 
prove his death-bed. And before the trials had even started Robert 
Ley — after stopping-up ears and nose and thrusting a gag into his 
mouth — had tried to hang himself by a twisted towel attached to 
the stopcock in his W.C. and had choked to death. Ley had been 
one of my bitterest enemies in the party although to my face he had 
always shown himself ostentatiously friendly. He was a notorious 
drunkard, given to every kind of erotic excess, and without the 
slightest sense of responsibility. 

Ley’s suicide led to our being more closely watched in our cells, 
more especially since Conti, the “Head of National Hygiene” 
{Reichsgesundheitsjuhrer), had also made away with himself while 
in prison. Henceforth a guard was stationed day and night outside 
the open shutter in the door of each cell, where he was relieved 
every two hours. There were, as I had reason to know, quite a few 
cads among them, but also many kindly souls who were not averse 
from carrying on a conversation now and then through the hole in 
the door. The behaviour of the coloured soldiers throughout was 
kindlier and more decent than those of our own race. 

It was remarkable how nearly all the guards asked for our auto- 
graphs. The demand increased to such an extent that in self- 
defence I acquired the habit of asking for a cigarette in return for 
each autograph. In this way I very soon collected a large stock of 
cigarettes which I was able later to hand over to my wife, thereby 
providing her with the only valid currency of the period. 

• The English translation of one of Fritzsche’s hooka; Hier Spricht 
Ham Fritasche. His experiences at the Nteibcrg trial are related in 
another book, The Sword in the Scales (Wingate, 1953). 



458 My First Seventy-Six Years 

We were not allowed to receive parcels from outside, though we 
were permitted to write letters once a week. In one such letter I 
had asked for a new suit, mine having grown very shabby in the 
two years that I had worn it continually. This too was refused, and 
for attendance in court I received instead jacket and trousers of 
very inferior material intended to give an impression of would-be- 
smartness. Neckties were only issued when we appeared in court 
and they, as well as shoe-laces, had to be given back afterwards. 
Every evening, too, we had to place our one and only chair outside 
the door of the cell so that we should not perchance, by standing 
on it, be able to get at the window during the night and "signal” 
to anyone outside. The nervousness revealed by this regulation 
reached such a pitch that one night the whole building was aroused 
by the alarm signal. Next day we learnt that the authorities had 
feared an attack on the prison by the populace, which, of course, 
turned out to be sheer nonsense. 

I.Q. stands for intelligence quotient. A German might be 
pardoned for mistaking the English pronunciation of these initials 
(eye kew) for a Chinese name I In the United States an individual’s 
capacity for employment is often determined by his intelligence 
quotient. The intelligence test has developed into a science which 
would, if it were possible, dispense good or bad luck to mankind in 
general, and for all one knows may even now do so in America. 

Throughout the duration of the trials by the International 
Military Tribunal we were visited in prison by doctors and others 
who had chosen to specialize and qualify in psychology. They 
engaged in conversation with each prisoner in his own cell in order 
to ascertain his mental condition, and from time to time to check 
up on how he reacted to captivity and to the progress of the trial. 
A dreary calling indeed. 

Since I knew myself to be entirely innocent I was a compara- 
tively uncomplex, but probably therefore also a comparatively 
uninteresting subject. They could discover no abnormalities in 
me. On the other hand, I myself was all the more amused by the 
intelligence test. 

There were several versions of this test, the first being the 
figurative interpretation of ink blots — a game which, if I remember 
rightly, had already been introduced by Justinus Kerner. A small 
quantity of ink is spilled on to a sheet of paper. The paper is then 
folded down the centre so that the ink is spread equally on either 
side of the fold, giving rise to all sorts of queer shapes. The test 
consists in pointing out what these shapes might be intended to 
represent. For us the task was made still more attractive because 



The Prisoners 


4 S 9 

different coloured inlis were used on the same sheet of paper. I 
succeeded in “reading into” these blots an astonishing number of 
pictures and shapes. 

The second test consisted in the immediate repetition of figure 
sequences. For instance, the examiner would recite the numbers 
8257936 and one had to repeat them from memory in correct 
order. The longer the sequences the more successful the I.Q. 
The sequences were recited backwards as well as forwards. 
Finally we had to put together puzzle games ranging from small 
plain-coloured blocks to intricately cut-out shapes. 

In all the versions of this test, the length of time needed to com- 
plete it was noted in seconds. From these elements an index was 
then compiled with a normal average equal to one hundred. Any- 
one with results totalling less than one hundred was reckoned to be 
below the average anyone achieving more than one hundred was 
above the average. In assessing these results, the age of the candi- 
date was taken into account, since neither a child nor an old man 
possesses the same mental power of apprehension as one in the 
prime of life. 

Among all the prisoners mine was the highest I.Q. 

My wife had succeeded in persuading the former President of 
the German Law Society, the well-known Justvarat (Barrister) 
Dr. Julius Dix, to interest himself in my case. After a considerable 
interval Dix said he would be prepared to undertake my defence. 
I had previously approached Professor Kraus of Gfittingen, who 
likewise expressed his willingness to do so. For several years he 
had been lecturer in American Universities and was one of the 
recognized experts on international law. When, however, Dix 
consented to defend me I asked Kraus if he would take on the 
position of second counsel for the defence, since I knew Dix to be 
an outstanding defendant’s counsel in criminal cases. 

I never had reason to regret this choice. I had been in com- 
munication with Dix over a number of years owing to our common 
political outlook, which is perhaps best described as “conservative 
democracy”. Dix was a man of exquisite tact and a gifted orator. 
His dislike of excessive formalistic work was offset by a high- 
quality and quick-witted intelligence. 

At first we were able to talk with our counsel seated at tables in 
a common room. Soon, however, these conditions were altered and 
we were allowed to see and talk with our lawyers only after special 
security measures had been instituted. A large room was parti- 
tioned off lengthwise into small, cabin-like compartments, in each 
of which sat a prisoner with a soldier on guard, while lacing them 



460 My First Seventy-Six Years 

on the further aide were counsel. We were separated from them by 
an erection, half window, half fine-meshed grille. We could see one 
another through the window and carry on a conversation through 
the grille. Any documents and other papers were handed through a 
slit under the window after they had been inspected by the officer 
on guard. 

In court, counsel were seated in front of the dock. Sometimes 
we were able to exchange remarks with counsel, sometimes this 
was strictly forbidden. Here too a check was kept on documents 
passed from one person to another. 

An American dentist and a German doctor were appointed to 
look after our health. The German was also a prisoner, a specialist 
in urology from Bad Wildungen, who, of course, was strictly pro- 
hibited from carrying any information or papers from one cell to 
another. Fortunately I had no need of doctors’ services. Like all 
other prisoners, however, I was subjected to psychological observa- 
tion by a young American professor Gilbert, of Austrian origin. 
Mr. Gilbert’s first duty was to note the effect on the prisoners of 
the daily court proceedings and thereby to supplement the subject- 
matter of the prosecution. My conversations with him were in 
parts exhilarating. 

From the very first day my. impression of the Bench was not 
unfavourable. The choice of British and French judges was un- 
doubtedly good. It was evident at first glance that they were char- 
acteristic representatives of their profession. I was not so easily 
able to sum up the American judges; and the Russians, the only 
ones to appear in military uniform, were completely inscrutable. 

The preliminary examination was exclusively in the bands of the 
Prosecution, who not only ignored any extenuating data, no matter 
how clearly set forth, but, unfortunately, also had frequent 
recourse to distortion and misrepresentation of which I myself 
was able to identify one example. We were shown a film in which 
figured the gold articles taken from murdered Jews, among them 
the notorious gold teeth and spectacle frames. These articles were ex- 
tracted from a sack on which the word “ Reichsbank ” was printed 
in large letters, which the filmreproduced with admirable clearness. 
These sacks could never have been used to store articles of gold. 
The picture, too, turned out to have been taken at Frankfurt-am- 
Main, Later it was found to be a specially “posed” interpolated 
photograph. 

Against such methods we prisoners were helpless. Further, 
owing to being completely cut off from all outside contacts, we 
were not in a position to furnish such documents and other 
evidence as would lead to our being exonerated. Counsels’ oppor- 



The Prisoners 461 

tunities for tracing such documents and witnesses were very 
restricted because, in that chaotic period, the only way to procure 
such documents and discover such witnesses was to go after them 
in person. 

We were not allowed access to the ample material which the 
Allies had confiscated. The preliminary examination, so far as 
we were able to co-operate, was limited to frequent hearings by 
representatives of the Prosecution, among whom were a large 
percentage of German-Jewish imigris. One of my interrogators, 
to whom I once apologized for my English, replied — ^with an 
obvious indirect hit at these gentlemen: 

“Oh, you speak very much better English than many of my 
colleagues.” 



CHAPTER FIFTY-EIGHT 


The Nurnberg Tribunal — I 

O N the morning of the 30th April 1946, the Nurnberg 
Tribunal began its proceedings against me. Dr. Dix, my 
counsel, addressed the President in the particular style 
which the German lawyers were obliged to adopt in this remark- 
able court : 

“I will commence my demonstration with a deposition by Dr. 
Schacht, and I would beg your Lordship to direct Dr. Schacht to 
take the stand.” 

On no other occasion was I so suddenly conscious of the un- 
reality — I might even say the ghostly atmosphere — of this “Inter- 
national Court of Justice” as in those few moments needed to leave 
the dock and take my place on the witness-stand. The great hall in 
which the proceedings took place was entirely without natural 
light. The windows of NUrnberg’s former Court of Assizes had 
been hung with draperies so as to exclude the daylight. Artificial 
illumination shed a sickly unbroken glare over everything. Despite 
the fact that for the accused persons it was a matter of life and 
death, the place vibrated with an unrest reminiscent of an ant- 
heap. The Prosecutors of the various nations were surrounded by 
their respective staffs. Messengers kept arriving with reports and 
papers. The sight of the American women secretaries at their 
clattering machines created a kind of optical confusion. To watch 
them incessantly chewing gum was to feel as though they were 
chewing on every word. On the Press-stand, immediately opposite 
the witness-stand, it was not much quieter. Only the few German 
reporters — ^thc only ones not in uniform and therefore immediately 
recognizable — ^remained unobtrusively in the background. The 
whole effect was something of a nightmare. Many of the accused 
suffered from overwrought nerves. In the building itsdf the shrill 
tones of American light music would frequently blare forth: 
curiously enough the song-hit of that time was Don’t Fence Me In, 
and the guards played it over and over, day and night. 

During the morning and also in the afternoon there would be a , 
short break. Then we were able to go to the lavatories, passing 
between a cordon of .American military police. Sometimes we 
were stopped in the passage. The military police would be drawn 



The Niirnberg Tribunal — I 463 

up on one side when the heavy silver trays of tea and shortcakes, 
doughnuts, etc., were taken into the courtroom for the Bench by 
German waiters, with American military police to see that they 
did not pinch so much as a doughnut on the way. 

And now for an incident which struck me as typifying the whole 
atmosphere. There were about two hundred of the Allies in tmiform 
standing about in the passage, who had business of one kind or 
another with the court. All of them were smoking cigarettes, and 
all of them carefully crushed the discarded cigarette-ends under- 
foot, for the information had obviously been circulated that the 
Germans told off to sweep down the corridor were wont to gather 
up the cigarette-ends. Long afterwards I was told by the solitary 
German journalist from the British Zone, who at the beginning of 
the trials was on the job in the Press-stand, that at sight of the place 
the officer in charge of him had exclaimed (in indifferent German) : 
“OhI but this isn’t a Court of Law — ^it’s a fair!” 

In oi-der to explain what follows, I must once again stress the 
methods of procedure in this court. They were based on the Anglo- 
Saxon legal usages. The prisoner could choose whether to appear 
in his own defence as witness under oath, or whether to refuse to 
give evidence. Naturally I did not refuse as I was conscious of my 
innocence. 

I did not need the earphones through which were transmitted 
French, Russian and German translations of the English speeches. 
Very often this apparatus failed to work. Then the President 
would exclaim somewhat plaintively: “I can hear nothing but 
Russian”, which was afact. Strangely enough, the Russian language 
was in the habit of monopolizing the mechanism. 

Sitting in the witness-box I repeated the oath after the President, 
and in reply to my lawyer’s enquiry — ^the questions had, of course, 
been agreed upon beforehand — gave a brief account of my life 
up to the year 1930, when I resigned my post as President of the 
Reichsbanlc. I was well aware that my judges were waiting for my 
explanation of this action, and I made no attempt to defend myself 
in answer to my lawyer’s question but proceeded at once to the 
attack: 

“I entertained differences of opinion with the Government of 
the Republic on two essential matters. One of these was the 
Government’s internal financial policy. After the appalling disas- 
ters due to our defeat in the War and the dictated peace of Ver- 
sailles it was essential, in my opinion, that Germany should adopt 
a very thrifty and unostentatious policy in her conduct of pubfic 
finances. The Democratic and the' Socialistic Governments at that 
time could not agree to that; on the contrary, they pursued a very 



464 My First Seventy-Six Years 

improvident policy which took the form of new large-scale liabili- 
ties abroad. Now it was perfectly obvious that under no cir- 
cumstances was Germany in a position to raise the necessary 
foreign money to meet these liabilities, groaning as she already 
was under the extraordinarily heavy burden of reparations. We 
could not even provide the payment of reparations from our own 
resources. 

“Consequently I set my face against this financial policy; 
although Governments everywhere had recourse to such debts, and 
probably encouraged industry and private business to do the 
same, I persistently warned them at home and abroad against this 
incurring of foreign liabilities. The foreign bankers refused to 
listen; the German Government refused to listen. That was the 
time when one could never be certain that on passing the Adlon 
Hotel, Unter den Linden, some financial agent would not emerge 
and enquire whether one could make use of a loan. 

“These men bitterly opposed me when Germany was com- 
pelled to suspend payment of interest. I emphasized most strongly, 
however, that I had at all times been entirely against a policy 
which encouraged the piling-up of debts,” 

When I spoke of the “Dictated Peace” of Versailles I noticed 
a certain uneasiness on the Bench and among the staffs of the 
Anglo-Saxon and French Prosecution, But that was my inten- 
tion. I meant to make them listen to what I had to say — and I 
succeeded. 

My lawyer questioned me again. I described how, in 1919 , 1 had 
taken part in the founding of the German Democratic Party and 
then went on to tell them of my first contacts with the National- 
Socialist party and its ideas. 

Following the elections in September 1930, Hitler’s Party had 
suddenly and surprisingly obtained one hundred and seven seats. 
I was on board ship en route for America when that happened, 
reading Hitler’s book Mein Kampf. I told the court: 

“As regards Mein Kampf, my opinion today is the same as it has 
been from the beginning: it is written in execrable German, a bit 
of propaganda work by a half-educated man strongly, not to say 
fanatically, interested in politics — the sort of man, in fact, that 
Hitler subsequently and invariably showed himself to be. There 
was one feature of the book, and to some extent also of the Party 
programme, which gave me much food for thought, and that was 
the complete lack of understanding of every Imd of economic 
problem. The Party programme contained a few propagandist 
catchwords such as ‘Common interest before self-interest* and 
‘Breaking free from the bondage of dividends’ and similar 



The Numberg Tribunal— I 465 

expressions, from none of which was it possible to make sense. 
They occurred frequently, too, in Mein Kampf, which from an 
economic standpoint is entirely uninteresting. 

“From the point of view of foreign policy, on the other hand, I 
considered Mein Kampf extraordinarily unsound, since it never 
ceased to toy with the idea that the extension of Germany’s living- 
space must take place in Europe. If these statements did not deter 
me from later working with a National-Socialist Chancellor, it was 
for the simple reason that in Mein Kampf Germany’s expansion 
eastwards was expressly pictured as contingent upon the British 
Government bestowing its blessing on the idea. I reckoned that I 
was very well acquainted with British policy ; there was therefore 
not the slightest danger that I should take these fantastic theorisings 
of Hitler’s any more seriously than I had hitherto done. 

“In my own mind I was quite clear that for Germany to extend 
her territory in Europe by violence was an impossibility, and would 
not be tolerated by other nations. For the rest, while Mein 
Kampf contained a lot of idiotic, high-falutin’ statements, it also 
included several quite decent ideas. Two — and I should like to 
stress this — ^two of them gave me great satisfaction. The first was 
that if someone differs from the Government on a political matter 
it is his duty to bring his views to the notice of the Government; 
and the second was that while Government by a Leader must re- 
place democratic Government — or should we rather say Parlia- 
mentary Government — ^the Leader himself could only function if 
he were certain of the support of the whole nation; in other words, 
even a leader depends upon general elections of a democratic 
type.” 

I then went on to describe how I had met Hitler at Goering’s 
house, and how, following our conversation, I had been to see 
Biiining, I described how I had urged him to include the National- 
Socialists in his Cabinet because I believed that only in this way 
could one capture and tame the tremendous &lan, the tremendous 
propagandist force that I had observed in Hitler. The National- 
Socialists must be gradually initiated into the practical duties of . 
Government: they must not be allowed to remain in opposition. 

I had the impression that at that time Hitler would have been 
quite ready for his men to form part of a Briining Cabinet, but 
Briining wouldn’t have it, and afterwards the juggernaut crushed 
him. 

Then Dr. Dix, my counsel, raised the point that the American 
Prosecution had charged me with being an opponent of the Treaty 
of Versailles. The American Prosecution obviously considered 
that to be against the Treaty of Versailles was a crime in itself. It 



466 My First Seventy-Six Years 

gave me immense satisfaction to be able to reply, which I did in the 
following words : 

“lam somewhat surprised to hear this charge from the lips of a 
member of the American Prosecution. The lieutenant who has 
just spoken is perhaps too young to have experienced it in 
person, but he could have leamt it in school ; at any rate it was, for 
all of us, one of the greatest events we had ever experienced, when 
the Versailles Treaty was rejected by America, and further — ^if I 
am not mistaken — ^that it should have been rejected with the over- 
whelming consent of the whole American people and, what is 
more, for the very reasons that I rejected it — ^because it was in 
direct contradiction to the Fourteen Points solenmly proclaimed 
by Wilson and because, where political economy was concerned, it 
contained a lot of preposterous suggestions that could not possibly 
be made to work in a world economic system. But I would not on 
that account accuse the American people of sharing in the Nazi 
ideology.” 

That was too much for the American judge. Quite casually I 
added : 

“I have been proud to belong to a nation that has given to the 
world men. like Luther, Kant, Goethe, Beethoven, to name only 
these few,” when Mr. Jackson, the principal American Prosecu- 
tor, cut in saying he didn't wish to listen to any philosophic discus- 
sions, he — ^the American Prosecutor — could not see anything 
unusual or indeed anything that mattered if a German objected to 
the Treaty of Versailles. 

This, in turn, was too much for my lawyer. He quoted a line 
from Schiller’s Wallenstein'. “Vor Tische las man's anders" (Men 
see things differently ere they have dined) and embarked on a 
wordy warfare with Mr. Jackson, who was obliged to beat a retreat 
and finally announced that the principal charge against me was 
that I had “deliberately engaged in preparations for a war of 
aggression”. 

Well, I could look forward calmly to any proofs the Prosecution 
might furnish in support of this absurd contention. So I listened 
quietly while the Presiding Judge argued with Mr. Jackson and 
Dr. Dix until it suddenly occurred to him to adjourn immediately 
for lunch. 

That afternoon Counsel and I had another dig or two at the 
Versailles Treaty, greatly to the annoyance of the Prosecution. 
Then we turned to other less important matters, such as a state- 
ment by Mr. George Messersmith, to whom I had spoken two or 
three times in my life, and who later, in America, chose to consider 
that he had known me well. In his statement he described me as 



The NiirrAerg Tribunal— I 467 

“cynical, ambitious, selfish, vain, double-tongued”. I told the 
court that I was not in a position to express such a detailed opinion 
on this gentleman’s character as I had seen him at most on three 
occasions, and then only for short periods. Then my lawyer, in fine 
style, drew the attention of the court to some bad mistakes in 
translation which reacted to my detriment. I could see that the 
court was impressed. 

Following the afternoon break (silver tea-trays, tea-service, 
doughnuts) my lawyer questioned me as to my attitude to the Nazi 
ideology of the “Master Race”. I upset the Anglo-Saxons imme- 
diately by remarking; ‘T have always considered such expressions 
as ‘Chosen People’, ‘God’s Own Country’, etc., as examples of 
a very unpleasing mentality.” Then I went on; 

“As a convinced upholder of the Christian Faith I take my 
stand on the basis of the Christian love of one’s neighbour which I 
owe to all men irrespective of race or creed. I would add that all 
this blather about the Master Race, which some Party leaders 
adopted, was the subject of violent ridicule on the part of the Ger- 
man public. Nor was it surprising, since most of the leaders in 
Hitler’s party were not exactly ided types of the Nordic race, and 
I know that among the poptilace, whenever these topics were 
mentioned, little Goebbels, for instance, went by the niclmame of 
‘The German pigmy’ (der * Schrumpfgermane'). To do them justice 
there was only one thing most leaders of the Party had in common 
withtheold Germanictribes: they were alwaysreadyforjustanother 
glass. Excessive drinking was a great feature of Nazi ideology.” 

Dr. Dix passed to the Jewish question. The indictment con- 
tained no charge against me on this count, but it did include the 
charge of Nazi ideology, and my lawyer rightly inferred that “the 
practice of the strongest anti-Semitism was inextricablyboundup 
with this ideology.” 

The result was exactly what we had expected. The Ameri- 
can Prosecutor, Jackson, sprang to his feet and interrupted the 
proceedings, exclaiming : 

“We concede that Dr. Schacht did give aid and support to indi- 
vidual J ews . But we maintain that he held the view that German J ews 
should be deprived of their rights as citizens, and we also main- 
tain that Dr. Schacht supported and took part in the persecution 
of German Jews.” 

Dr. Dix immediately raised the question whether I was likewise 
charged with war crimes on land and sea, and demonstrated from 
the indictment that this was indeed the case. Jackson became very 
excited. The President intervened. My war crimes on land and sea 
were temporarily shelved and we returned to the Jewish question. 



468 My First Seventy-Six Years 

“The Jewish Question,” I said, “arose as early as 1933 when 
James Speyer, the New York banker (who has since died), 
announced his visit. I went to Hitler and told him: “Mr. James 
Speyer, one of the most respected of New York bankers and a 
great benefactor of his former country, is coming to see me and I 
intend to give a banquet in his honour. I take it that you have no 
objection.” Whereupon he replied, in very decided and striking 
fa.shion : “Herr Schacht, you may do anything you like.” From this 
I gathered that he gave me full liberty to associate with my Jewish 
friends as hitherto, which I did. And the banquet took place. I 
mention this only because it was the first time the Jewish question 
came up between us. Two instances should suffice to illustrate 
the attitude I adopted on every occasion concerning the Jewish 
question^ — and I invariably sought a chance of doing so in public,” 

And then I described the Arnswalde case — already mentioned — 
and my address to the Reichsbank oflEice-boys at their Christmas 
party, I also described the conversation I had with Hitler in July 
1934 about the unobstructed activities of Jews in business. 

I found it almost painful to have to recount all that I had done 
for the Jews — ^painful because to champion such persecuted people 
is, at bottom, no more than the duty of any decent man. 

My lawyer felt it would be a good thing to let the Tribunal know 
my opinion of Hitler. Scarcely had he expressed this view than 
Hermann Goering — so far as he could manage it— slewed round in 
the dock and partly turned his back on me. I told the court that I had 
always regarded Hitler as belonging to the dangerous, half-educated 
type, and still did so. In the dock Gocring’s attitude was the 
embodiment of ostentatious disapproval as I went on to elaborate: 

‘ ‘ Hitler never had much schooling, but he made up for it later by 
an infinite amount of reading ; he acquired a tremendous amount of 
book knowledge and showed off these accomplishments like a 
virtuoso in all debates and speeches. In some respects he was un- 
doubtedly a genius. Ideas would strike him which never occurred 
to anyone else, the sort of ideas sometimes calculated to overcome 
great obstacles, whether by their staggering simplicity or frequently 
by their staggering brutality. He had a positively diabolical genius 
for mass psychology. General von Witzleben once confirmed that 
whereas I and one or two others never allowed ourselves to be 
entrapped in our personal conversations with Hitler, he contrived 
to exert a most amazing influence over other people ; and in spite 
of lus harsh, grating voice, and the way that voice would break and 
sometimes rise to a shriek, he managed to inspire huge crowds with 
the most hysterical enthusiasm. I believe that in the beginning 
he was motivated by impulses not wholly evil.” 



The NUmherg Tribunal — I 469 

Goering turned so as partly to face me and stared expectantly 
at me as I went on: 

“There is no doubt that Hitler at first believed himself to be 
actuated by good intentions; but by degrees he succumbed to that 
very spell which he exercised on the masses. For whoever sets out 
to mislead the masses will himself end by being led — and misled — 
by those same masses. In my opinion it was this interplay — ^this 
leading and being led — ^that induced him to pursue the downward 
course of the herd instinct, which every political leader should 
avoid like the plague.” 

Goering once again changed his position and whispered to 
Ribbentrop. Obviously he did not agree with me. I noticed also 
how the unfortunate Admirals Raeder and Donitz continued to 
stare at me. 

I conceded that I could not help admiring certain things about 
Hitler. “He was a man of indomitable energy, and a will that rode 
roughshod over every opposition. In my view it was due solely to 
these two factors — mass psychology and his own force of will — 
that Hitler was able to command the support of an3rthing up to 
forty per cent, and later nearly fifty per cent., of the whole German 
nation.” 

Gisevius was then sworn as a vidtness by counsel. He had 
previously stated that I had displayed marked activity in my 
efforts to bring about Hitler’s doT)^all. Dr. Dix wanted to know 
when I first realized the great extent of my own inner aversion 
to Hitler, 

I said it was after the R 5 hm Putsch. It was well known that at 
that time Hitler had caused the deaths of many of his former 
friends and many of his enemies. I recounted my conversation 
with him, which is mentioned elsewhere in this book. 

I went on^o describe how I soon discovered that I had been 
mistaken in my conception of Hitler’s relations with members of 
his Party. It never entered his head that certain things cannot be 
permitted in a well-ordered State. Far more important for him was 
the desire to provide the bulk of the Party wim certain amenities 
in the way of free popular entertainment. 

Dr. Dix pursued the subject, and wanted to know the moment 
when I first became a “conspirator” against Hitler, I gave it as 
dating from the Fritsch affair, which I have already recounted in 
detail. 

Every time the Fritsch affair was mentioned in Nlimberg, 
Goering would lean his head on his right hand. He had played such 
a great part in the business and it made him very uncomfortable to 
hear Fritsch’s name spoken in court. 



47° My First Seventy-Six Years 

In the course of the Fritsch affair — ^not suddenly, but over a 
period of weeks, even months — ^it became obvious to me that 
Hitler wanted war, or to say the least, that he was not prepared to 
do cver 3 rthing in his power to prevent war. I told myself that an 
appalling danger had arisen in which violence could be destroyed 
only by violence. Fritsch was eliminated, Blomberg absent, 
Neurath dismissed. I said, literally: 

“Any possibility of political propaganda among the German 
people could be completely ruled out. There was no freedom of 
assembly, no freedom of speech, no freedom of authorship; it 
was not even possible to engage in conversation in small, intimate 
circles. The country was riddled with spies and snoopers and every 
word uttered in the presence of more than one other person was 
liable to endanger one’s life. The only thing that remained was to 
proceed by force against this terror that admitted of no democratic 
emendation and no reasonable criticism. Eventually I I'eached the 
conclusion that the only way to end this Hitler-terror was by an 
attempt at a Putsch, and in the long run an attempt on Hitler’s life.” 

“What was your feeling about Hitler at that time? Were you 
merely disappointed in him, or did you feel he had played you 
false ? ’’ enquired Dr. Dix. “What is your reply to that? ’’ 

“I was never disappointed in Hitler,” I answered, “because I 
never expected more of him than was to be expected from a know- 
ledge of his character. But I did feel that he had played me false, 
that he had lied to me and deceived me right and left, for every- 
thing that he had promised the German people at first — ^including 
myself — ^he afterwards failed to perform. He promised equal rights 
for every citizen, and to his followers — ^regardless of their quali- 
fications — ^he gave many more rights than to all other citizens. He 
promised that the laws relating to foreigners should apply to the 
Jews, i.e. that they should enjoy the same protection accorded to 
foreigners. He caused the Jews to be deprived of all rights and 
treated as outlaws. 

“He promised to combat political lies, and his policy — aided 
by his Minister Goebbels — consisted of nothing but political lies 
and political trickery. 

“He promised the German people to uphold practical Chris- 
tianity and he tolerated and encouraged the profanation, vilifica- 
tion and condemnation of Church institutions. In regard to foreign 
policy, he consistently repudiated the idea of a war on two fronts, 
and later allowed conditions to reach a point where such a war was 
unavoidable. He disregarded and disdained all, the laws of the 
Weimar Republic which he had sworn faithfully to uphold when 
he became Chancellor. 



The Nurnherg Tribunal— I 471 

“He mobilized the Gestapo against the freedom of the individual. 
He stifled all free interchange of news and views; he pardoned 
criminals and took them into his service. He did everything he 
could in order not to keep his promises. The whole world — 
Germany — I myself — he tricked and lied to us all.” 

Dr. Dix’s next question annoyed the Prosecution. He asked me 
why, as a member of the Reichstag, I had voted for Hitler’s 
Enabling Law. He also wanted to know why I had immediately 
joined Hitler’s Cabinet. 

I replied that I had never in my whole life been a member of the 
Reichstag. A single glance at the “Reichstag Handbook’’ would 
confirm this. Furthermore, I did not join the Cabinet immediately 
after the “upheaval”. 

Dr. Dix appeared astonished. “But the indictment affirms that 
you did both”, he exclaimed. 

“Unfortunately”, I replied, “there is a great deal in the indict- 
ment which is not correct.” Members of the Prosecution sta& put 
their heads together. Two American officers hurried from the 
court. Jackson, the Prosecutor-in-Chief, appeared to be grumbling 
about something to one of his assistants. The President announced ; 

“ It is now five o’clock. The court will adjourn for today.” 

Dr. Dix remarked that tomorrow was the ist May ; he did not 
know if the court would be taking a holiday or whether the hearing 
would be resumed. 

There would be no holiday — the hearing would be resumed. 

At nine o’clock, therefore, on the morning of that ist May, 
when the hearing continued and I again occupied the witness- 
stand, Dr. Dix asked me to explain why I had joined the Cabinet as 
Minister of Economic Affairs in 1934. I replied that, had I con- 
sidered my own personal peace and comfort, I could have remained 
quietly at home in the country. But I should have asked myself how 
such action would have benefited the progress of German politics. 

I felt an urge to describe to these foreigners, who were my judges, 
the conditions prevailing in Germany at that time. I went on: 

“We had aleady reached a stage when any public and openly 
expressed opposition to, and critidsm of the Hitler Government 
had become impossible. No large assemblies, no meetings, were 
allowed. Every statement by the Press was subject to criticism and 
censorship, and any chance of a political Opposition — ^without 
which no Government can exist — ^had been ruled out by Hitler’s 
policy of terror, 

* ‘ There was only one position from which one could attempt to 
exercise criticism and eventually to establish an opposition, and 
prevent bad organization and unsotmd measures on the part of the 



472 My First Seventy-Six Years 

Government. Opposition was possible only within the Govern- 
ment itself. Secure in this knowledge 1 joined the Government, 
and I hoped in the course of years to find a certain amount of 
support, a certain backing, within the ranks of the German people. 
There was still a great mass of intellectual leaders, professors, 
teachers and scientists : I could not expect that they would simply 
acquiesce in this intellectual enslavement. There was still also a 
great mass of industrial entrepreneurs, leading business-men of 
whom it could not be assumed that they would subject the 
management of their businesses to an economic thraldom. I had 
hoped to obtain from all these groups a certain amount of support 
which would enable me to achieve some restraint and adjustment 
within the Government itself. So I joined Hitler’s Cabinet, not in 
a spirit of enthusiastic approval but because I realized that it was 
essential to go on working for the German people, and that the 
brake could be applied, and unsound measures rectified, only 
within the ranks of the Government itself.” 

Judge and Prosecution stared at me in astonishment when I 
declared that in my opinion the decent elements were numerically 
superior, even within the Party itself. They were still more aston- 
ished when I said that in the beginning crowds of decent young 
fellows joined the ranlcs of the S.S. for the very reason that 
Himmler represented the S.S. as sometliing that would stand for 
an ideal way of life. 

I was keenly aware that the court listened with rapt attention as 
I explained how it was that Hitler understood how to attach his 
more intimate Party associates to himself. He luiew something 
about each one of them — some false step, some misdemeanour. 
He knew every detail of their lives and they all felt they were 
bound to him by the menace of possible disclosure. 

I had further occasion to refer to the alcoholic tendencies of the 
Nazis. I wanted to make it clear that I had not mentioned this in 
order to disparage anyone personally. 

“In the course of further developments”, I explained, “I 
noticed that a large number of those very Party members who had 
become enmeshed in Hitler’s net, and who occupied more or less 
leading positions, gradually became terrified of the results of the 
evil and the atrocious crimes to which they were constantly being 
incited by the system. I have the definite impression that these men 
sought to escape their conscience by resorting to the most varied 
forms of vice in order to dull their sensibilities, and that this factor 
was the main cause of their actions. Otherwise there could be no 
accounting for the numbers of suicides that took place when the 
system collapsed.” 



The Numberg Tribunal— I 473 

I was conscious that many prisoners in the dock stared at me in 
consternation. I felt the moment was approaching when I could 
deal with the general substance of the charge. The indictment 
accused me of having “Taken part in a conspiracy with the ob- 
ject of committing an illegal breach of the peace”. To my great 
pleasure, Dr. Dix had the same idea. He put the question : 

“Did you ever receive information as to any secret understand- 
ing, any secret orders or secret allusions which had for their object 
an illegal breach of the peace?” 

I could truthfully affirm that neither I, nor any of my ministerial 
colleagues, nor any other leading men who were not members of 
Hitler’s inner circle, had ever been in a position to receive such 
information. 

Counsel instructed me to explain the nature of my dealings 
with Hitler. I replied: 

“During the early years he repeatedly urged me to lunch with 
him and a few intimate friends at the Chancellery. I tried it at 
intervals on two occasions and I must admit that I was repelled, 
not only by the level of conversation and the fawning attitude 
towards Hitler’s person, but the entire company was uncongenial. 
I never went there again nor did I ever call upon Hitler in my 
private capacity,” 

I then had to describe my dealings — ^frequent or otherwise — 
with the other Party bigwigs. When I had done so Dr. Dix read 
from Mr. Jackson’s indictment: 

“Does anyone believe that Hjalmar Schacht — seated in the 
front row at the Nazi Party Rally of 1935 and wearing the badge 
of the Party — does anyone believe that he was included in this 
Nazi propaganda film solely for artistic reasons? In so far as this 
great thinker lent his name to this shabby \mdertaking he in- 
vested it with a certain respectability in the eyes of every laggard 
German.” 

First of all I expressed my thanks for the compliment; “great 
thinker”, was very pleasant. Then I caused a fearful amount of 
embarrassment to Mr. Jackson and his large staff. I possessed no 
Party badge as early as 1935 — which was very tiresome for the 
American Prosecution. The judges eyed them with evident dis- 
pleasure. In order to take any remaining wind out of their sails, I 
described quite simply and straightforwardly that I had attended 
the functions in Nurnberg in 1933 and 1934. Then Dr. Dix 
brought up his heavy artillery. He asked me whether the Diplo- 
matic Corps had been present at these Party rallies in the person of 
the heads of their respective diplomatic missions. 1 explained that, 
with the exception of the Soviet and the American Ambassadors, 



474 Seventy-Six Years 

all the other leading diplomats had been present, “in considerable 
numbers, on grande te?iue, and in the front row”. 

This announcement immediately caused a great stir throughout 
the court, not merely among the Prosecution but also among the 
foreign journalists. Only the Russians stared proudly straight 
ahead. I was well aware that it would not be long before the 
American Prosecutor interrupted counsel and myself, for it was 
only too easy to see what we were driving at. If the British and 
French Ambassadors — ^not to mention any of the others — could 
attend the Party Rally as Hitler’s guests, why not I? I saw 
that Mr. Jackson was on the point of jumping up when my lawyer 
managed to fire yet another shot. How to explain the presence 
of foreign diplomats at the Niirnberg Party Rally, was what he 
wanted to know. 

“The Diplomatic Corps, as such, only attends State functions. 
This, however, was purely a Party affair. How can their presence 
be accounted for?” he exclaimed. 

Jackson was already on his feet, obviously very perturbed. He 
objected to counsel’s statement and to my own, 'Then, in a queer 
sort of sentence, he declared that the whole business caused him 
no embarrassment whatever, “if indeed anything like embarrass- 
ment could arise”. It struck me as being a bit muddled. 

There was an uproar. Mr. Jackson’s assistant pushed some 
papers at him. He held them together in his hand but did not read 
them : instead he waved them in the air and shouted : 

“There is not the slightest value as evidence in anything this 
witness” (meaning myself) “may say concerning the conduct of 
Ambassadors from other countries and his views thereon. The 
reasons for their presence at a Party rally, to which he lent his 
name, seem to me to have not the slightest value as evidence. I do 
not demur to the fact of their being there, but I think that if he is 
just talking for the sake of talking, without producing any fact . . . 
I vsdsh to make it dear that I have no desire to raise any objection 
to any fact known abdut the witness, nor have I raised any objec- 
tion to any fact known about the witness, nor have I raised any 
objection to moat of the opinions on which he has expatiated at 
such length, But I consider that his attitude to the actions of foreign 
emissaries is outside the scope of important and essential evidence.” 

I tried to say something. So did Dr. Dix. The President inter- 
rupted us both. The Russians, full of conscious pride, continued 
to stare straight ahead, with an occasional sideways glance at the 
British and French judges. The President finally said Dr. Dix 
should proceed. But my lawyer had no mind to change the subject 
at present. He wanted to reply to Prosecutor Jackson and assured 



The Nurnberg Tribtmal—I 475 

the court that he did so, not from any desire to be obstinate but 
because it was important that they should realize how difficult it 
made matters for the German Opposition when representatives of 
foreign countries had made a point of attending the Party Rally. 

The Presiding Judge was very fair. The gist of his reply was that 
if counsel wished to prove that these diplomats had been present 
at the Party Rally there was nothing to be said against it. 

Mr. Jackson engaged in a brief rearguard action, but in this 
matter both Dr. Dix and I were aware that we had carried our 
point, and he immediately switched over to another equally 
important subject. 

“You gave your support to rearmament through Reichsbank 
funds. Why?” 

“The Allied Powers had promised a general disarmament”, 
I said. “I considered that, politically speaking, Germany was 
entitled to the same rights as the other Powers. Since they did not 
keep their promise of general disarmament I felt that my own 
country would be obliged to rearm within the usual limits.” I 
went into detail, described the function of the Mefo-bills (which I 
had previously touched on) and gave the Americans a clear picture 
of European conditions. I told of the rearming of Czechoslovakia 
and Poland at that time and of how, in 1935, Russia had announced 
her intention of bringing the total strength of her peacetime army 
up to a million men ; and I regaled the Americans with a conversa- 
tion I had with their then Ambassador in Moscow — ^Mr. Davis — 
on the occasion of his journey through Berlin. I read out a sentence 
from the Ambassador's Recollections, in which he describes this 
conversation : “Schacht almost leaped out of his chair with enthu- 
siasm when I expounded President Roosevelt’s suggestion that 
rearmament should be restricted to such weapons of defence as a 
man could carry on his shoulder.” I quoted another passage from 
Mr. Davis’ book, according to which I pleaded earnestly for 
general disarmament. All this time I kept my eye on Jackson with 
the feeling that something would happen before long. Dr. Dix was 
of the opinion that I should tell the court how much money I had 
placed at the disposal of the Reich for purposes of rearmament. 

Once again Mr. Jackson was on his feet. That, he asserted, 
was entirely beside the point. No-one was interested in whether 
German rearmament had cost too much or too little. 

Dr. Dix replied calmly that, on the contrary, the court ought to 
be interested: for according to the vastness or paltriness of the 
amount it should be possible to establish without a doubt whether 
a war of aggression was being planned or whether rearmament was 
solely for ptirposes of defence, I must confess that I myself did not 



476 My First Seventy-Six Years 

do much to facilitate the discussion, for I made a slip in quoting 
millions instead of milliards. A faint smile of satisfaction went 
round the dock at this contretemps. 

Dr. Dix reminded me that the indictment reckoned it a crime 
that during my period of office as President of the Reichsbank 
under the Third Reich, the national indebtedness had increased 
threefold. 

To which I cheerfully and calmly replied : 

“The indictment might just as well have accused me because, 
during my period of office, the birth-rate in Germany had risen 
considerably. I wish to state emphatically that I am guiltless of 
both.” 

The French judges smiled faintly; the others remained impas- 
sive. 

In spite of Mr. Jackson’s unwillingness, considerable argument 
ensued as to the sums spent on German rearmament for as long as 
I remained in control of the country’s finances. This statement 
told greatly in my favour, and the Presiding Judge allowed it. 

In the afternoon the discussion centred round how much I had 
known of Hitler’s immediate war aims. For the other nations, the 
beginning of Hitler’s warlike activities dated from the march into 
Austria. I said that this was not a military activity at all but a cere- 
monial welcome to the German troops by the people of Austria. 
Strange to say, Mr. Jaclcson remained seated and Dr. Dix speeded 
up proceedings by having me describe my attitude up to the year 
1938. 

This led to the disclo.sure of a remark by Speer. In the summer 
of 1937 Speer was at Hitler’s mountain home. He was sitting on the 
terrace and heard, through the open window, how Hitler and I 
were quarrelling. Speer saw me disappear. Hitler came out on to 
the terrace and said to the man waiting there, i.e. Speer: 

“I have just had a serious dispute with Schacht; I can’t work 
with Schacht any longer, he upsets all my financial plans.” 

That was entirely correct; I did upset Hitler’s financial plans, 
and for a vital — and to me highly important — reason. I did not 
wish him to prepare fora war of aggression and I had no intention 
of helping him to do so. In fact, where Hitler was concerned I laid 
an embargo on Reichsbank funds. He was compelled to apply to 
the big banks, and it is easy to imagine what he thought of me. 
Easy, that is, for a German, but I Imd to make it quite clear to 
the others. In reply, therefore, to the question put by my lawyer. 
Dr. Dix, I elucidated : 

“If I had said to Hitler: I’m not letting you have any more 
money because you mean to go to war, I should not be here and I 



The Niimhurg Tribunal— I 477 

should not be enjoying this stimulating conversation with you, 
Herrjmtissrat. 1 should have had to consult a parson, and it would 
have been a one-sided affair for I should have been lying silent in 
my grave while the parson recited a monologue,” 

On Thursday, the and May 1946, the subject came up of my 
dismissal as President of the Reichsbank. The indictment main- 
tained tliat I had “wangled** my dismissal simply and solely in 
order to be relieved of my financial responsibilities. The Prosecution 
contended that a memorandum which I had handed to Hitler, and 
as a result of which three of us were dismissed (myself as Presi- 
dent of the Reichsbank, Dreyse as Vice-President and Hiilse, a 
member of the board and chief financial reporter) contained no 
mention of our refusal to allow Hitler any funds for his war plans. 
Instead, we had based our refusal of further credits on technical 
grounds, such as the excessive demands of the capital market, the 
impossibility of increasing taxation and such-like. I explained to 
the court that under the Third Reich it just was not possible to 
tell Herr Hitler ; I’m not giving you any money for your war. I told 
them also how, when he had received the memorandum, Plitler 
had shouted; “That*3 mutiny!** 

“On more than one occasion I have stated that I constantly dis- 
cussed the position in Germany — ^and my own position — ^with 
friends abroad, not only witli Americans, British, French, but also 
with neutrals. And I would like to add something else : foreign 
broadcasts were never tired of talking about Schacht’s stand against 
Hitler, so that my friends and family were scared whenever 
anything of the kind was mentioned in Germany.” 

I then went into details; 

“As early as 1937 I tried to ascertain which groups could be 
counted on for support in an attempt to overthrow the Hitler 
regime. During 1935, 1936 and 1937 I found, to my regret, that 
the circles on which I had pinned my hopes were broken reeds. 
They were the scientists, the educated middle-classes and the 
leading business-men. 

“I need only mention that scientists meekly sat and listened to 
the most absurd National-Socialist speeches without the slight- 
est attempt at resistance. I remember how leading business-men, 
when they saw that I no longer counted for anything in the 
business world, crowded into Goering’s anterooms and dis- 
appeared from mine. In short, there was no relying on either of 
these groups. The only remaining depcndables were the Generals, 
the Army; the more so (according to my opinion at that time) 
because one would have to reckon on armed resistance even in the 
Praetorian Guard of the S.S, 



478 My First Seventy-Six Years 

“As a result, I first sought contact with Generals, such as Kluge, 
if only to ascertain whether there were any men within the ranks 
of the Army with whom one could speak frankly. I have already 
related this here and don’t want to go into it again. This first 
step brought me into touch with Generals of the most varied types 
during the course of the war.” 

Dr. Dix asked what 1 had done following the outbreak of 
war. 

“Throughout the whole war,” I replied, “I approached every 
General who was in any way available. There was no question, 
therefore, of being satisfied with mere theory: I was in communi- 
cation with every one of these Generals. In 1941 I had a series 
of conversations with General Hoppner, in which I tried to in- 
duce him to take action. Hbppncr was ready and willing and, 
as is well known, lost his life following the events of the 20th July 
1944. In 1942 I made another attempt to persuade General von 
Witzlcben, and to this end I went to Frankfurt-am-Main where 
he had hla headquarters. And von Witzlcben showed, as he had 
always done, that he was absolutely determined to act, but told 
me that of course he could only do so when he obtained another 
front-line command.” 

I described in broad outline my connection with Beck and Goer- 
deler, with my friend Striinck, and then counsel submitted an 
affidavit by Colonel Gronau concerning my relations with General 
Lindemann, one of the chief participators in the Putsch. Gronau ’s 
statement, quoted verbatim, read: 

“Schacht blamed Lindemann for the long delay on the part of 
the Generals. It was essential that the attack on Hitler should take 
place before the Allies landed.” 

A topic of discussion at the afternoon session was what Hitler 
said about me following the events of the 20th July 1944. Speer 
knew exactly what he had said. On the 2znd July, Hitler had 
personally made out the order for my arrest. While doing so he 
had been mad with rage, and his remarks about me had been 
positively venomous. He had beeir seriously hampered by my 
“negative action”. He would have done far better to have had me 
shot even before the war had stiuted. 

When I related how I had exhorted other counti-ics again and 
again to pursue an economic policy which would afford the 
German people chances of livelihood, but that those countries 
had never paid any heed to my exhortations, the Russian General 
Rudenko lost his temper and exclaimed: 

“Mr, President! For two days now we have listened to long- 
winded, tedious statements by the prisoner Schacht, and I am of 



The Niimberg Tnbtmal — 7 479 

the opinion that the statement now furnished by the prisoner 
Schacht is in no sense an answer to concrete questions relating 
to the chai'ge against him, but merely so-much talk. It seems to 
me that it merely prolongs the trial.” 

The President, however, stated that the court did not desire to 
obstruct me in the conduct of my defence. 

Dr. Dix put a very pertinent enquiry : 

“Why did you not emigrate?” 

To which I replied : 

‘ Tf it had been a question only of my personal fortunes, nothing 
would have been easier. But my personal affairs didn’t come into 
it. Having devoted myself since 1923 to the common weal, the 
question for me was the very existence of my people, my country. 
In all history I have never known emigrants — I am speaking, of 
course, of voluntary emigrants, not of the expelled — I have never 
known of emigrants to be of use to their country. They were of 
no use in the French Revolution of 1792, they were of no use in 
the Russian Revolution of 1917, and they were of no use in the 
National-Socialist Revolution which we have experienced,” 

The Presiding Judge turned to my lawyer and observed 
pleasantly: 

“I don’t think we want any history lectures here, do we, Dr. 
Dix?” 

My lawyer expressed his agreement every bit as pleasantly and 
turned to me, saying; 

“We understand your meaning, Dr. Schacht.” To which I 
replied : 

“Thanlr you very much.” 

Dr. Dix now fired his parting shot. Pie returned to the subject 
of the foreign diplomats, the gist of his remarks being that for 
people like myself it was a matter of great significance when the 
whole international world was on the best terms with Plitler; 
whereas I had been against him^ — even officially — ^since 1938, 

There followed, of course, a great argument as to which subject 
should or should not be discussed in court. Between the President 
and my lawyer the following was generally agreed upon : my lawyer 
would be permitted to ask: “How did recognition of the Nazi 
Government on the part of other countries react upon — how did it 
affect this group of conspirators with which the prisoner Schacht 
was connected?” 

But the American Prosecutor Jackson would have none of it. 
In his vehement fashion he .sprang to his feet, once again waved 
his papers about in the air, and announced that he objected to this 
question. Of his own accord he said: 



480 My First Seventy-Six Years 

“We are gradually approaching a situation which in my opinion 
cannot be tolerated in this court, and I entirely fail to see how 
it constitutes an extenuating circumstance within the scope of 
Schacht’s defence, to point out that foreign Governments main- 
tained contact with the German Reich, even during the period 
of its degeneration.” 

He had summed up the situation correctly. He was really in an 
impossible position, as the outcome of the trial proved. But he 
was out to save what could be saved from the wreck. F^r the time 
being his efforts had failed. The President declared: 

“The Court is of opinion that the question is one of impor- 
tance.” 

So I substantiated my statement as to which foreign statesmen 
and missions were on friendly, even cordial, terms with Hitler, at 
a time when Hitler and I were already at loggerheads, and I saw 
how Mr. Jackson was seething with irritation. 

The court adjourned for ten minutes, and I knew that matters 
would soon take an interesting turn, for Mr. Jackson — ^who was still 
seething inside — ^was to cross-examine me after the sitting was 
resumed. He was after my scalp. I had no mind to let him have it. 



CHAPTER FIFTY-NINE 


The Niimherg Tribunal — II 

I N order even to begin to understand the methods resorted to by 
Mr. Jackson, the .^erican Chief Prosecutor, when he started 
to deal with me after that ten-minute brealc, it is essential to 
bear in mind the international political situation in 1946. The 
Allies had won the war; they were very proud of it, and rightly so, 
for it had been a long and terrible struggle. Into this mighty fact 
of world history there intruded — ^now that it was all over — a lot 
of petty human elements. Who had personally won this war? As 
always, world opinion on this question picked on the names of great 
statesmen and generals. But there were many small-part people 
and “supers” who wanted to snatch a leaf from the huge laurel 
wreath suspended above the heads of the Great Ones, that they 
too might go down in history. The Americans, above all, mistook 
temporary fame for historic^ immortality, and I fear that at the 
time Mr. Jackson also succumbed to this error, That he did so is 
excusable, for the big American newspapers featured “The 
Niirnberg Trial” as front-page news. They made much of their 
compatriot, Mr. Jackson. For a time he embodied in his person 
the American Public who wanted to see the “war criminals” 
hang. Mr. Jackson was going to help them realize their wish. He 
was popular over there so long as the Niirnberg trial lasted. 
When it was over the Americans had other fish to fry and Mr. 
Jackson was forgotten. 

In May 1946 however, in the full glare of publicity, Jackson 
understood well enough that he owed the American Press some- 
thing and conducted himself accordingly. He must do more than 
just prove the acaised guilty: he must keep an eye open for news 
items and show what a smart, capable fellow he was, Only so 
could he bolster up and add to his reputation. Inspired by such 
considerations he proceeded to the attack. 

The first question was very telling. He wanted to know whether, 
in 1938, 1 had or had not said to my neighbour at a dinner party: 
“My dear lady, we have fallen into the hands of criminals.” How 
could 1 have foreseen that? 

Yes, I certainly had said so. 



482 First Seventy-Six Years 

“I am sure,” he went on with conspicuous unconcern, “I am 
sure you would wish to assist the court by telling us who these 
criminals were.” 

I saw at once what he was driving at and answered tersely: 

“Hitler and his associates.” 

Immediately he aimed his first shaft at me. He thought it was a 
good one, I thought it bad. He asserted that I myself had been one 
of Hitler’s associates. 

“I want you to mention by name all those accused persons you 
consider to be criminals”, he exclaimed, with a threatening glance 
towards the dock, expecting to make capital out of my statement 
against all the other prisoners. 

My answer was based on the premise that I had no idea who 
were the members of Hitler’s inner circle. I had always counted 
Gocring as one of them, I affirmed, and personally I would add 
Himmler, Borraann and Hcydrich. 

“Those men are all dead,” replied Jackson angrily. 

I couldn’t help that, I conceded that von Ribbentrop, the For- 
eign Minister, must have been kept informed as to Hitler’s plans ; 
beyond that, I maintained, I was unable to answer that question. 

I had spoilt his aim— but he immediately tried again. He 
showed me some photographs in which I appeared with all the rest 
of the Third Reich outfit. That was the crowd I went around with, 
according to Jackson. 

I protested: “Now, if you had snapped me with my other 
acquaintances as often as this, the pile would have been ten times 
bigger.” 

There was a faint murmur of appreciation from the Press-stand, 
but not for Mr. Jaclcson, and he was aware of it. As quickly as 
possible he changed the subject; he blamed me for having done all 
I could to bring about a participation by the National-Socialists in 
the Government of Germany — ^not directly, not in so many words, 
but by striving for effect and by all sorts of little innuendoes, 
such as what I had said to such-and-such an industrialist, and 
to Herr von Papen ; what I had written on this or that occasion; 
what I had set down under “Secondly” and “Thirdly”. He 
approached his main point from many angles, by means of all 
manner of questions and assertions. I stuck to what I had already 
said with absolute truth, namely, that no Government in a demo- 
cratically-governed country could afford to ignore the Party with 
the largest number of adherents. That would lead — ^as indeed it 
had led— to disaster. Jackson instanced speeches that I had deli- 
vered on the occasion of Hitler’s birthday, and I replied that it was 
the custom, the world over, to deliver eulogies on the occasion of 



The NUmierg Tribunal— II 483 

the birthday of the head of the State without having to weigh 
one’s words. 

I had never worn my gold Party badge in everyday life. But, 
maintained Jackson, 1 had done so on official occasions. 

I replied that wearing this badge had ensured many advantages 
in railway travel, care of one’s car, booking of hotel accommoda- 
tion, and so forth. 

Finally, he wanted to know whether, when I entered the Govern- 
ment, I told Hitler that I joined his Cabinet “only to put the brake 
on his programme ’’. 

Even today I shudder to think of what would have happened 
if I had done so. At Niirnberg at the time, I exclaimed: 

“Oh, no, I took good care not to tell himl’’ 

Having hitherto fought a vanguard action, Mr. Jackson now 
suddenly attacked me from the rear. According to my own evidence 
I was the man who had put the brake on Hitler’s rearmament 
programme. So he (Jackson) went for me from behind. 

“I take it, anyway, that you admit to being partly responsible 
for Germany’s having lost the war?” 

I said I considered that was a very strange question, I thought to 
myself, “What is he driving at? Can he foresee that this ‘Inter- 
national Court’ will acquit me? Is he so obsessed by personal 
animosity against me that he wants to discredit me in the eyes of 
my own countrymen?” 

“I am in no way responsible,” I answered, “for the war having 
been started. So I cannot assume any responsibility for our having 
lost it. I never wanted a war.” 

Jackson changed the subject and embarked on the Jewish ques- 
tion. I managed to state my case coherently in spite of the fact 
that he made a point of cutting in after every few words. 

‘ ‘ In regard to the predominating influence of the Jews in Govern- 
ment, legal and cultural matters, I have always adhered to a certain 
principle, I do not consider that such predominating influence is 
good, either in the interests of Germany and the German people — a 
Christian State based on the Christian outlook— -or in the interests 
of the Jews themselves because it arouses animosity against them. 
Consequently, I have always declared myself in favour of limiting 
Jewish activity to a certain extent in all these fields— -a numeried 
limitation, based not absolutely on population figures, but rather 
on a certain percentage.” 

Jackson blamed me for not standing out against the paragraph 
relating to Aryanism and State officials when it was passed into 
law. In addition, during my term of office as a Minister of the 
Reich, all Jewish lawyers had been forbidden to appear in court, 



484 My First Seventy-Six Years 

And I myself, along with others, had put my name to a bill pro- 
hibiting Jews from dealing in foreign exchange and engaging in 
economic councils of investigation. 

“And you also approved a law,” he finally exclaimed, “provid- 
ing for the death penalty for any German subjects who trans- 
ferred German property abroad or allowed German property to 
remain abroad?” 

“Certainly,” I replied sharply. • 

Jackson : “And you knew tliat this would hit those Jews who were 
going abroad more severely than anyone else ?” 

I retorted: “I certainly do not hope that the Jews have proved 
worse cheats than the Christians.” 

Notwithstanding the fact that, at this stage in his examination, 
Jackson obviously sought to prevent my giving a detailed state- 
ment, I did succeed in explaining why I had taken part in all these 
activities. I did so, I said, because, while in my opinion they were 
all questionable, they were nevertheless not important enough to 
warrant my mdting a complete break with the Hitler Govern- 
ment. This answer obviously put lum off liis stroke. He wanted to 
know what my object had been in remaining in the Government, 
what could have been sufficiently vital to induce me to put up with 
all these goings-on. I told him that to me, the supremely important 
thing was to put Germany on an equal footing with the other 
Powers from the point of view both of economy and rearma- 
ment. And I added, in order to make it quite clear : “That was my 
opinion tlien, and I stand by it today.” 

Jackson needed a little time to proceed with what he doubtless 
was pleased to call an examination. I had the impi’ession that he 
was now anxious to come to the main point in the indictment, in 
which I was charged with having participated in preparations for 
a war of aggression since I had supplied the finances for it. He 
brought up the Mefo-bills; he brought up everything he possibly 
could; he accused me of having encouraged export trade for 
the sole purpose of obtaining sufficient foreign exchange for the 
import of such raw materials as could be titilized for purposes 
of rearmament. Finally, he charged me with having taken cer- 
tain measures as would enable me to retain my hold on German 
finances. He quoted from a memorandum which I had handed to 
Hitler: 

“The following contentions are based on the premise that the 
duty of German policy is to carry out the rearmament programme 
in accordance with the prescribed schedule; that everything 
else must be subordinated to this end, so long as the one main 
objective is not jeopardized through neglect of other matters.” 



The Niimberg Tribunal— II 485 

He asked me whether I had written that. 

I not only wrote it ; I handed it to Hitler in person. I answered : 

“It was my business to control the Party subscriptions and 
Party monies which were extracted everywhere from the pockets 
of the German people. I could only get Hitler to agree, of course, 
by telling him: ‘this is obviously being done in the interests of 
rearmament.’ Had I told him, ‘It is being done, for instance . . 

Mr. Jackson tried to interrupt. I asked hi m to let me finish. “If 
I had told him, ‘this is being done in the interests of theatre- 
building’ or something similar it would not have had the slightest 
effect. But if I said to him, thk or that must be done because 
otherwise we cannot rearm, that was where I could get hold of 
Hitler and that was why I put it that way.” 

Oddly enough, Mr. Jackson considered that I had “misled” 
Hitler. I retorted: “I should not call it ‘wwleading’ I should call 
it ‘leading’, Mr. Jackson.” 

“But ‘leading’ someone without telling him the real motives 
that prompted you?” 

“ If you want to lead anyone,” I answered, “ I believe you stand 
a far better chance if you don’t tell him your real reasons than if 
you do.” 

He sprang to his feet in triumph. “Thank you for this frank 
exposition of your ideology, Dr. Schaclit. I am indeed much 
obliged to you.” 

Mr. Jackson had no luck for the rest of the day. He started going 
into technical financial details in connection with German rearma- 
ment and became quite simply dull. The journalists left. The court 
was frankly bored. That suited me very well, and I did nothing to 
relieve the general tedium. 

So ended the second of May 1946. 

The third of May began with the Presiding Judge, Sir Geoffrey 
Lawrence, informing Mr. Jackson and myself that the interpreters 
had complained that we spoke too fast. Mr. Jackson was very 
much the grand seigneur. 

“I must ask the interpreters to forgive me. It is difficult to 
discard the habits of a lifetime.” 

The President agreed. “Yes, it is very difficult.” 

I said notliing: the interpreters were no affair of mine. I did not 
need them and I did not mind much whether they found their task 
easy or difficult. 

Mr. Jadcson broached the subject of my relations with Goering. 
According to him we had had differences of opinion of a private 
nature and up to the time of my retirement from all official posts 
we had not been on good terms. 



486 My First Seventy-Six Years 

“On the contrary,” I retorted, “till then wc were always very 
nice to each other.” 

“Really!” exclaimed Jackson in astonishment. 

“Oh, yes.” 

Then he set a trap for me. “So your dift'crcnces with Gocring 
began with the contest as to wluch of you should be in charge of 
the military preparations?” 

“No ...” I countered, but Jackson cut in before I could say 
more. I protested against the interruption and declared : 

“The differences that led to my resignation arose from the 
fact that Goering wanted to direct the economic policy while I 
shouldered the responsibility.” 

Jackson let off a firework. He was determined to prove that 1 had 
resigned from the Government only because I was not allowed to 
prepare for a war of aggression on an even larger scale than • in the 
opinion of the Prosecution — I had already managed to do up to 
1938. He had all his data and facta in a hopeless muddle and 1 told 
him he was not “correct”. 

He got no forrader and finally gave in, remarking that at the 
moment he was not interested in the sequence of events. 

Nevertheless I was on my guard. I did not think he would 
abandon his tactics merely because of wrong data. He went on to 
speak about the first years of the Hitler regime, left my statement 
that Goering and I had “always been very nice to each other” until 
my retirement — ^hanging in mid-air, and proceeded to read aloud 
what I had once written about Goering: 

“I have described Hitler as an amoral type, but I can only 
regard CJoering as fwmvoral and criminal. Gifted from the start 
with a certain bonhomie, which he knew well how to exploit in 
the interests of his own popuhuity, he was the most egocentric 
creature one could imagine. For liim the attainment of political 
power was but a means to personal enrichment and personal 
luxury. He was consumed with jealousy over anyone else ’a success. 
His greed knew no bounds. His love of precious stones, gold and 
jewels was incredible. He was entirely lacking in esprit de corps. 
So long as anyone was useful to him — ^and only so long — ^hc could 
be pleasant enough, and even so, it was merely put on. 

“Goering’s knowledge of all the subjects which a member of 
the Government should master was precisely nil, especially iit the 
field of political economy. He hadn’t the faintest idea of any of the 
economic details Hitler entrusted to him in the autumn of 1936, 
although he built up an enormous staff and abused his power as 
Economic leader, according to all the rules of the game. His 
personal appearance was so theatrical that one could only compare 



The Niirnherg Tribunal — II 487 

him with Nero. One lady who went to tea with his second wife 
described how he came in dressed in a kind of Roman toga, 
sandals bestrewn with precious stones, innumerable rings on his 
fingers, and otherwise decked out with jewellery, his face and lips 
plastered with make-up.” 

He had scarcely begun to read when Goering flounced around 
indignantly. 1 could not quite see what had prompted Mr. Jackson 
to read my words about Goering aloud. Did he hope that Goering 
might possess some secret information to the effect that I did take 
part in preparations for a war of aggression ? Whatever the reason 
I felt bound to protest at once: 

“1 really must ask you not to mix up your dates again. It was 
not until later that I learned and experienced all the things you now 
mention, and not in 1936 as you make out.” 

Only then did Jackson stop juggling with dates, and proceed to 
his next question: “Had I not drawn Hitler’s attention to the 
question of colonics?” 

Mjyie//; “Certainly.” ^ 

Jaclison: “What colonies?” 

Myself; “Our colonies.” 

Jackson: “Where were these colonies?” 

Myself: “I take it you know that as well as I do.” 

Jackson: “ You arc the witness. Dr. Schacht. I want to know 
what you told Hitler, not what I biow.” 

Until now he hadn’t breathed a word about what I had said to 
Hitler. I answered : 

“Oh, what I told Hitler? I told Hitler we would try to get 
back some of our colonies, which we were no longer allowed to 
administer, so that we could work there.” 

Jackson; “What colonics?” 

Myself: “I was thinking especially of the African colonies.” 

Jackson: “And you considered that these African colonies were 
indispensable to your future plans — ^for Germany?” 

I told him that my Colonial ambitions concerned only "our own 
property”. 

He thought he had caught me out. “And your property, as you 
call it, were the African colonies?” 

He had not caught me out— J had caught him. "The term 
‘property’”, I retorted, “was not ray own: The Versailles Treaty 
describes these colonies as ‘German Property’.” 

He was completely at sea. That is what happens when American 
Prosecutors arc sent over to Europe who don’t even know anything 
about the Treaty of Versailles. His answer did not reveal any great 
presence of inind. “You can call it what you like ”, he sajd angrily, 



My First Seventy-Six Years 


488 

That was just what I had done. 

His next remark was idiotic. If — he asserted — I had wanted 
colonies, I must also have been in favour of naval rearmament in 
order to create a sea power which would safeguard our access to 
the colonies. 

“It never occurred to me,” 1 exclaimed. “What on earth put 
such an idea into your head?” 

He repeated his question: “Did your Colonial plan include such 
rearmament as would make of Germany a great naval power so 
that the route to these colonics would be safeguarded?” 

Myself: “Not in the least.” 

Turning slightly towards the Press-stand he enquired very 
sarcastically: “Then your plan was to leave the trade routes 
unprotected.” 

Poor fellow! I had foreseen that question long ago and was 
prepared for it. 

“Oh, no,” I said. “I had imagined that they would be suffi- 
ciently protected by International Law.” 

There was a murmur in the Press-stand, but not for Mr. Jack- 
son, and it seemed to me as if the Bench betrayed some impatience. 

There was nothing left for the Prosecutor but to change the 
subject. With much detail, and quotations from sundiy speeches of 
mine, he accused me of having played my part as one of the crew 
that manned the Third Reich boat. The gisit of my reply invariably 
'was that I had never disputed the fact, but that I had emphasized 
my reasons for doing so. Then he proceeded to dodge the question 
and suggested that I must surely deplore the use that Hitler had 
made of the Wejtrniacht. 

I agreed. 

So I did regard the invasion of Poland as an unwarranted act of 
aggression? 

My reply consisted of one word: “Absolutely.” 

There ensued the following ludicrous dialogue : 

Jackson: “The same applies to the invasion of Luxembourg?” 

Myself: “Absolutely.” 

Jackson: “And to Holland?” 

Myself: “Absolutely.” 

Jackson: “And to Denmark?” 

Myself: “Absolutely.” 

Jackson: “And to Norway?” 

Myself: “Absolutely.” 

Jackson: “And to Jugoslavia?” 

Myself: “Absolutely.” 

Jackson: “And to Russia?” 



TJie Niirnberg Tribunal— II ^8g 

Myself: “Absolutely, my dear sir; and you have forgotten 
Belgium.” 

He then went on to affirm that all these attacks had been carried 
out with that same Wehrmacht which I had helped to create in 
the early years of the Third Reich because I had furnished the 
necessary funds. 

I could only reply: “Yes, unfortunately.” ^ 

Mter the interval Jackson showed a film in which I appeared, 
together with several others, when we greeted Hitler on his return 
from France after the French capitulation. I had been bidden to 
attend on this occasion as Minister without Portfolio. It seemed to 
me that Jackson was out to prove that I nevertheless still exerted 
considerable influence. When the film was over he asked me : 

“As Minister without Portfolio what did your Ministry consist 
of?” 

Myself: “Nothing.” 

Jackson: “How many had you on your staff?” 

Myself: “One woman secretary.” 

Jackson: “What was your office accommodation?” 

Myself; “A couple of rooms in my private house.” 

After a few more questions of this sort which did not get him 
any forrader, he turned to my personal financial circumstances. 
But there was no information to be gleaned here, for I was paid by 
the Reichsbank, and my ministerial salary was ineluded. 

Then he wanted to know: “You are entitled to draw a salary 
and a pension, the one being offset against the other— that’s the 
idea, isn’t it? The agreement held good so long as you were a 
member of the rdgime?” 

Myself: “That still holds good today — ^it has nothing whatever 
to do with the rdgime. And I hope I shall still receive my pension, 
otherwise what shall I have to live on?” 

“Well,” he said, not without a certain wit but with a note of 
malicious hope in his voice, “perhaps the cost of living won’t be 
very great in your case. Doctor.” An unpleasant jest at my expense 
but on a higher level than anything he had said until now. I had 
to laugh. 

The Presiding Judge was much displeased. He interrupted the 
examination to observe angrily: 

“One moment! It is entirely unnecessary that one of the 
persons present in this court should express his amusement by 
laughing.” 

Generally speaking, Jackson seemed to feel he had better finish 
with me. Contrary to his expectations the Press no longfer evinced 
any great interest in his dialectics. Towards the end of his 



490 My First Seventy-Six Years 

examination he became familiar, addressed me as “Doctor” and 
made a last, swift attempt to disprove that I had ever been in actual 
contact with the group of conspirators of the 20th July 1944. 

I no longer put myself out very much, for if indeed justice were 
to be found in this court that fact must already be deemed to have 
been proved by the evidence of the witnesses. And so it turned out. 
At the very last he raked up something I had once said, and 
gathered from it that 1 regarded those generals who had given 
Hitler their unqualified and unreserved support in his wars of 
aggression as equally guilty with Hitler himself. I had said that, 
and there was no getting away from it. 

Scarcely had Mr. Jackson informed the Presiding Judge that 
he had no further questions to put to me than Dr. Hans Laterncr 
jumped up and protested against my remarks about the generals. 
He was defending the General Staff and the Supreme Command, 
who were being arraigned in corpore. 

Mr. Jackson stated that he would not make use of my answer 
against the General Staff and Supreme Command. Dr. Latcrner 
withdrew his protest. 

And now there appeared on the scene Major-General G. A. 
Alexandrov, Assistant Prosecutor for the Soviet Union. 

The General found himself immediately at odds with the Presi- 
dent, for he began by asking the same questions to which I had 
already replied to Mr. Jackson. Several times I said to him : 

“ I have repeatedly given my evidence on this question. Will you 
kindly refer to the same.” 

But Major-General Alexandrov had a piece of paper in front of 
him on which were written the questions he wished or had been 
instructed to ask me, and he was obviotisly firmly resolved to 
carry out those instructions. Again and again he would say: 

“Will you kindly repeat that?” 

The President, however, grew tired of this procedure and 
ordered; 

“If he has already given evidence on that subject, that is suffi- 
cient.” 

General Alexandrov became confused, rccapitulsitcd parts of my 
evidence and enquired whether I had said this and thus, to which 
I replied: 

“Yes, we have both dealt with this already.” 

He consulted his list again and challenged me. 

“And what led you to collaborate with Hitler, since your out- 
look was opposed to his theory and to the theories of German 
Fascism?” 

But by now the President was really angry. 



The Nurtiberg Tribunal — II 491 

“General Alexandrov 1 " he exclaimed, “he has already told us 
why he collaborated with Hitler — you must have heard him,” 

Major-General Alexandrov, however, actually wanted to hear 
once again what part I had played in Germany’s fi na ncial affairs. 
I replied; 

“But I have already furnished detailed information on that 
point.” 

The President grew more and more irritated and protested : 

“General Alexandrov 1 The court has already listened to a long 
cross-examination and does not wish the same facts or points to be 
dealt with again. Will you kindly tell the court whether you desire 
to put forward any questions of special interest to the Soviet 
Union, which were not dealt with in the cross-examination.” 

But now the Russian General was angry too. He maintained that 
I had not given “sufficiently clear” answers to the American 
Prosecutor’s questions. The controversy between him and the 
Presiding Judge became critical; the latter was quite determined: 

“The court does not intend to listen to questions which have 
already been submitted.” 

The Russian was right off his stroke. His list had ceased to be of 
any use to him. It looked as though he wanted to seek further in- 
structions, so he suggested that we should already adjourn for 
lunch, although it was still fairly early. 

Once again the Presiding Judge was furiotis. There could be no 
question, he said, of an adjournment at this hour. The General 
could proceed. The General passed his handkerehief across his 
forehead and said : 

“But surely you were in supreme control of the economic 
conduct of the war?” 

“That question has cropped up ten times already.” I felt 
exactly the same as the Presiding Judge — ^sick and tired of hearing 
the same things again and again. 

“I have not heard it from your own lips — ^not once”, the 
Russian exclaimed in astonishment. 

But the President had had enough. He told Major-General 
Alexandrov: 

“The prisoner has always admitted it, and, of course, it is 
perfectly obvious that he was in supreme control of the economic 
conduct of the war. The question you put to him was whether, in 
that capacity, he had had any share in rearmament for a war of 
aggression, and he had declared over and over that such was never 
his object; that bis object was the obtaining of equal rights for 
Germany. That is what he said, and we have to consider whether it 
is true. But that he did say it is quite certain.” 



/j,gz My First Seventy-Six Years 

Right up to the midday break the Russian General and I contin- 
ued our heavy-footed skirmishing. 1 harked back continually to the 
fact that to all the questions he asked me I had already given my 
answers — to Mr. Jaclcson; and 1 persisted in this vein until the 
President announced that the court would adjourn for lunch. That 
was Friday, the 3rd May 1946. 

After the adjournment General Alexandrov announced : 

“Mr. President! Out of respect for the wishes of the court and 
the fact that the prisoner Schacht has already been examined in 
detail by Mr. Jackson, I have been through the minutes of this 
morning’s procedure and am now in a position to reduce consider- 
ably the number of questions addressed to the prisoner Schacht in 
the course of my cross-examination. I now have only two questions 
for the prisoner Schacht.” 

Both these questions were simply fatuous. P'undamentally they 
were right outside the atmosphere of the court. They took no 
account whatever of anything that had been previously said, and 
even today I often wonder what kind of problems the General had 
been mulling over in his mind, while proceedings against me had 
been taking place in his presence. 

I-Iis first question was whether I admitted having taken an active 
part in Germany’s economic preparations lor wars of aggression. 

I replied in the negative. 

Secondly — and he quoted a statement of mine — he wanted to 
know whether up to 1938 my attitude had not been such as to 
give the impression that I agreed with Hitler and his methods 
of government. 

My reply to that: “I was in complete agreement with him so 
long as his policy tallied with mine; afterwards, no, and then I 
left.” 

General Alexandrov retired and my place in the witncas-.stand 
was taken by Wilhelm Vocke, a former Director of the Reichsbank 
and member of the board. I had returned to my scjit in the dock. 

Vocke described my early period at the Reichsbank and then 
began to tell an interested audience about an evcitt that occurred 
in 1936. 

“In 1936,” he said, “the board of the Reichsbank received a 
communication marked Strictly Confidential from either the High 
Command or the General Staff, with instructions to transfer the 
bank’s stocks of gold, securities and notes from the German 
border territories to a more central zone. The reason given for 
these instructions was as follows: In the event of an attack on Gei-» 
many on two fronts, the High Command is resolved to evacuate 
the border territories and concentrate on a more centralzone, which 



The Numberg Tribunal—Il 493 

can be defended under any circumstances. From the map which 
accompanied this communication I can still recall that for purposes 
of defence the eastern frontier stretched from Hof right up to 
Stettin. Of the western frontier I have a less clear recollection, 
but Baden and the Rhineland were both mentioned. On receipt of 
this information the Reichsbank in fact became extremely alarmed 
by the threat of an attack on Germany on two fronts involving 
the surrender of huge tracts of German territory, as well as by the 
monstrous suggestion that, in the event of foreign occupation, the 
bank should leave the population entirely without funds. On these 
grounds we turned down this last-named request, but consented 
to remove the gold and transferred it to such other centres as 
Berlin, Niirnberg, Munich, etc. On one point there could now be 
no further doubt, namely, that our rearmament was of a purely 
defensive character.” 

For me this was an extraordinarily important piece of evidence. 
It proved to the court that in 1936 the Military “high-ups” 
mentioned to the Reichsbank the possibility of such a desperate 
defence situation. Who now could still maintain that, as far back as 
1936 , 1 had any idea that Hitler was planning a war of aggression? 

Vocke then went on to describe an incident going back to 1937: 

“In that year, when the economic system was running on oiled 
wheels and fresh funds kept pouring in, Schacht invoked the aid 
of German professors and national economists, and invited them 
to a conference with the object of persuading them to adopt his 
policy of restraint. One of those present on tliat occasion suddenly 
asked Schacht; ‘And supposing war were to break out?’ Where- 
upon Schacht rose and said: ‘Gentlemen, in that case we’re 
finished — ^it would be all up with us. Please let us drop the subject 
—there’s no point in racking our brains over it.’ ” 

I noted wi^ satisfaction the way in which the court listened to 
Vocke’s reliable and clearly-spoken evidence; but I saw too that 
Jackson was growing uneasy. 

Vocke proceeded to speak of the first days after the outbreak of 
war; 

“Schacht had invited those directors who seemed to him relia- 
able, to a discussion. The first thing he said was ; ‘Gentlemen, this 
is a betrayal such as the world has never before witnessed. The 
Poles never received the German offer. The newspapers are lying 
so as to hypnotize the German people into a sense of security. 
The Poles have been taken completely by surprise, Henderson 
never even received the offer, only a brief extract from the 
Note by word of mouth. When a war breaks out, the question 
always arises as to who was responsible for it. This is a clear case 



494 Sevmty-Six Years 

of war guilt', if ever there was one. One cannot imagine a greater 
crime.’ ” 

Vocke described how I had exclaimed: “Our rearmament is 
useless. We have been tricked by rogues and knaves. The money, 
has simply been poured down the drain.” 

He spoke of my general conception of politics and of how I had 
once remarked : “A foreign policy without any sort of armament is 
impossible in the long run.” 

He continued: “Schacht also said that the neutrality he desired 
for Germany would liave to be an armed neutrality if there were 
any question of a conflict between the Great Powers. Schacht was 
of the opinion that it was essential that Germany should rearm if 
she were not to remain permanently defenceless among armed 
nations. He was not thinking of any particular attack, but he said 
that in every country there was a war party who might come into 
power today or tomorrow and that, having regard to her neigh- 
bours, a wholly defenceless Germany was an impossibility in the 
long tun. More, she would constitvitc an actual. danger to peace 
and a temptation to other nations to invade her sooner or later.” 

After Vocke had concluded his evidence, Mr. Jackson endea- 
voured, but without success, to pull it to pieces. Vocke’s evidence 
remained on record; it had obviously created an impression. 

From the 3rd May to the 15th July 1946 1 was obliged to remain 
in the dock and li.sten to the sometimes grim proceedings against 
the other prisoners. 

On the 15th July Dr. Dix began his speech for the defence as 
follows: 

“The unique character of Schacht’s case is evident at once from 
a glance at the dock, and from the story of his imprisonment and 
defence. Whatever the qualifleations of the prisoner Kaltcnbrunner 
may have been, he was at any rate head of the Department of 
National Security. Until well into May 1945, Schacht was 
imprisoned by the Department of National Security in various 
concentration camps. Now, gaolcr-in-chicf and prisoner are both 
in the dock — a curiously grim sight which in itself should give rise 
to serious consideration on the part of all connected with these 
criminal proceedings— Judges, Prosecution and Defence alike. 

“As has been established here in this court, Schacht was sent to 
a concentration camp by Plitler’s order. The charge against him 
was one of high treason against the Hitler regime. The People’s 
Court headed by Criminal- Judge Freisler would have sentenced 
him to death, but for the turn of events which meant that from 
being Hitler’s prisoner he became the prisoner of the ■victorious 



The Nurnberg Tribunal— II 49^ 

Allied Powers. In the summer of 1944 I had been instructed to 
defend Schacht in Adolf Hitler’s People’s Court ; in the summer of 
1945 I was asked to undertake his defence before the International 
Military Tribunal. This too is a self-contradictory state of affairs 
which, so far as it concerns Schacht’s person, likewise compels 
serious consideration on the part of all connected with the trial. 
We are automatically reminded of the fate which overtook Seneca. 
Hitler’s counterpart — Nero — ^had Seneca brought to trial for revo- 
lutionary activities. After Nero’s death Seneca was accused of 
having taken part in Nero’s misgovernment and Nero’s atrocities — 
that is to say, of conspiring with Nero. The situation is not without 
a certain wry humour in that, as early as the fourth century of our 
Christian era, Seneca was declared to be a pagan saint. Even if 
Schacht does not indulge in similar expectations, this historic 
precedent compels us never to lose sight of the fact that the 
impending verdict of this tiigh Court will have to justify itself 
also before the judgment-seat of history.” 

Dr. Dix then went on to describe the difficulties which must 
confront a foreigner endeavouring to gauge the sociological 
conditions in Hitler’s Germany, particularly those relating to 
constitutional law and internal policy. 

“Very few Germans living in Germany ”, he said, “were aware 
of the balance and allocation of power within those groups which 
were apparently or actually called upon to devote their best 
efforts to the moulding of the political mind. Most Germans will 
be astonished at the revelation of this state of affairs. How much 
more impossible was it for a foreigner, at the time the charge was 
preferred, to gauge the sociological conditions in Hitler’s Ger- 
many, particularly those — alrea% mentioned — ^relating to consti- 
tutional law and internal policy. But to gauge them correctly was 
essential to the proper preferment of any charge based on actual, 
valid premises. I am of the opinion tliat in this respect the Prose- 
cution is faced with an insoluble task.” 

My lawyer and I had always been of one mind on this theme. 
If, owing to a complete lack of truthful information, it was hardly 
possible for the Germans thenwelves to realize the historic events 
that had been taking place in the Third Reich, how then was it 
possible for foreigners? Who indeed knew how it had all started — 
before the Third Reich — actually on the zoth July 1932 while the 
Papen Government was still in power. 

The Prosecution liad mobilhied one witness against all the 
prisoners in the dock, a man who had something to say — and that 
was the former Prussian Minister Severing whose death occurred 
recently. When, at the Nurnberg trial, he had told the court how 



496 My First Seventy-Six Years 

everything had started, tlie foreigners had been struck dumb with 
amazement, unable to take their eyes off him; his evidence was 
wellnigh incredible. On the 20th July 1932, he said, two police 
officials had called at his house, stating that the President of the 
Reich had sent them and that he — the Prussian Minister of the 
Interior — ^was to resign his office at once. Such a demand, such 
procedure, were in no sense compatible with the constitution on 
which von Kindenburg had taken his oath. Severing had the right 
— one might say the duty— ^to resist. The Prussian police, who 
came under his jurisdiction as Minister of the Interior, were still 
at that time completely disciplined and absolutely reliable inas- 
much as each official did exactly what he was told. 

But what had Herr Severing done? He had offered no opposi- 
tion to this abrupt and unconstitutional dismissal. He had trotted 
meekly home, tendered his resignation and drawn his pension as 
long as the Third Reich had lasted. Hitler never looked upon him 
as his adversary, nor threw him into a concenti-ation camp as he 
did me : he left him entirely in peace and — as history has proved — 
he was right. 

But there is more to come. Severing was a prominent Social- 
Democrat and had played an important part as a labour leader of 
rank and title. It was to the German working classes, however, that 
the words of the poet applied : 

All the wheels stand silent, stilled, 

Since tliy mighty arm so willed. 

Once in the course of German history all the wheels did stand 
still because a mighty arm so willed it. 'Phat was during the Kapp 
Putsch. On that occavsion the power of well-organized troops col- 
lapsed before the resistance of the trade unions who had called the 
general strike. But neither in 1932 nor in 1933 did Severing call 
upon the unions to resist. He did nothing to prevent their silent 
and complete dissolution. He risked nothing, neither did he lay 
himself open to any unpleasant consequences. 

Yet we know from the history of the European working classes 
that there was a time — ^a time of desperation and intense bitter- 
ness — ^when they struck against German troops, namely, in Hol- 
land during the occupation. The Dutch labour leaders called a 
strike. But in Germany Herr Severing never got that far. In 
Niirnberg, to the great satisfaction of the Prosecution, he described, 
me as “not to be trusted” and said I had “betrayed the cause of 
Democracy ”. 

To my way of thinking, Democracy in Germany — at any rate 
the Severing variety — ^threw in its own hand. 



The Niimberg Tribunal — II 497 

The court was all attention as Dr. Dix expounded this theme 
and contrasted Severing *8 complete passivity with the activity I 
had displayed. 

“Schacht ”, he asserted, “has just proved himself an apostle of 
activity. All he lacked at the beginning was the intuition of true 
insight into the personality of Hitler and certain of his satellites. 
But this is no punishable act, nor is it any indication of criminal 
deception. This intuition was lacking in most people, both inside 
and outside Germany. Intuition is a matter of chance, an un- 
accountable gift of grace. Every man, even the wisest and cleverest, 
has his limitations. Schacht is undoubtedly very clever, but in his 
case cleverness has prevailed at the expense of intuition. In the 
long run, however, we shall be able to bring full understanding to 
bear on this situation only when we appreciate the mysterious 
forces at work in the universe, of which Wallenstein says: ‘The 
earth belongs to the spirit of e^, not to the good’ ; and speaks of 
those ‘evil-natured powers of darkness, who lurk beneath the 
light of day.’ Adolf Hitler was an outstanding instance of these 
powers of dai'kness, whose influence was the more baleful in that 
he was lacking in every form of Satanic greatness. He was and 
remained a half-educated, completely unintellectual petit bour- 
geois who, furthermore, was entirely without any sense of right or 
justice. The prisoner Frank was right when he said that Hitler 
hated lawyers, because the lawyer, as a man of justice, seemed to 
him to obstruct his power. That was why he could promise any- 
body anything without keeping his word, because to him a promise 
was only a technical means to power and had no valid or morally 
binding significance. 

“At that time, too, Himmler’s and Bormann’s evil influence was 
not discernible to Schacht, nor in all probability to anyone else. 
But within this trio were the gradually maturing seeds of all those 
crimes which have come before this court, because for Himmler 
politics was identical with murder; because with his purely 
biological outlook he saw human society simply as a breeding- 
ground, never as a social and ethical community.” 

From philosophy Dr. Dix turned to history. He instanced 
Nero, that Caesar to whom, at the beginning of his reign, all 
honourable men flocked to do service, and who did not reveal 
his true countenance until later. Dr. Dix described that power 
which Nero so perverted as “the poison of deification by the 
masses”. 

From philosophy and history, however, he had perforce to 
revert to present-day facts. Among the difiiculties inherent in this 
court was that the time that elapsed between the hearing of a 



498 My First Seventy-Six Years 

prisoner and the subsequent verdict ran into months ; in addition 
there were many prisoners. There was always the risk — and the 
prisoner had to face it~of an official of the court forgetting much 
of what had passed before the Tribunal — ^wcll, the Russian Major- 
General Alexandrov was a case in point: on the Wednesday he no 
longer remembered what had taken place on the Monday or 
Tuesday. 

The time had now conic for my lawyer to recapitulate. lie 
began by demonstrating that, at the beginning of his rule, eminent 
foreigners had regarded Hitler in much the same light as had 
Schaeht, He quoted a passage from an article in the Daily Mail of 
1934 by Lord Rolhermcre, the British newspaper king: “The 
most notable figure in the world today is Adolf I litlcr. . . . Hitler 
is one of a direct Hue of great leaders of humanity who seldom 
arise more than once in every two or three centuries. ... It is good 
to see that Hitler’s speech has greatly enhanced his popularity in 
England.” 

The President immediately intervened and declared that he 
would not countenance the foregoing quotation. The court 
would not admit as evidence an expression of opinion by Lord 
Rothermere. 

Dr. Dix retorted sharply by quoting a man to whom the 
Presiding Judge’s stricture could not apply, namely, Sir Neville 
Henderson, the last British Ambassador in Berlin. Kir Neville 
wrote in his Memoirs : 

“It would be to a great extent grossly unfair not to recognize 
that a large number of those who threw in their lot with Hitler 
and worked for him and for the Nazi regime, were honest idealists.” 
And he had added: “It is possible that in the beginning, Hitler 
himself may have been an idealist.” 

Dr. Dix reiterated and recapitulated everything that had trans- 
pired in eourt. 

There was a break of ten minutes in his speech, during which he 
left the courtroom. At the end of that time, however, the pro- 
ceedings could not be resumed because Dr. Dix had not returned. 
The court, and all of us, sat and waited. But Dr. Dix did not come. 
Finally the President beckoned to a Sergeant of the American 
Military Police and whispered to him, obviously instructing him to 
go and look for Dr. Dix. The Sergeant left the courtroom and 
returned immediately with Dr. Dix. 

What had happened? 

The guards, who were clustered round the door of the court- 
room, had suddenly made up their minds not to let my counsel in. 
Why? Not a soul at that time knew the reason, and probably no 



The NiirnherglTribiinal — II 499 

one has heard it to this day. They probably thought: “This 
damned German lawyer — he was entirely superfluous, they’d 
hang the prisoners anyway — the whole bunch; all right, they’d see 
to it that he didn’t return to the courtroom — ^he could just stay 
outside.” 

Oh, those guards ! Those guards ! They were unpredictable as 
children. They had the most eccentric notions, sometimes even 
rather droll ones. I had the following from a German journalist : 

Towards the end of the trial, when German newspapers were 
being published again, there was a whole crowd of German news- 
papermen in Niimbcrg. Everybody will remember that cigarettes, 
especially American brands, were at that time in very short supply 
and very expensive. One day the American Military Police, who 
as a rule treated the Germans like dogs, suddenly became quite 
afl'able and explained that they were in need of German money 
and willing to sell cigarettes, but only if the Germans would buy 
them in bulk. The journalists agreed, paid for and received a 
goodly number of cartons — ^thousands of cigarettes. 

That evening, when the purchasers were about to leave the 
building, the Americans were waiting for them at the entrance, 
searched their customers and confiscated the cigarettes as “the 
property of the American Army ”. 

But to return to my lawyer. He had been found outside the door, 
and brought back by the Military Policeman sent by the President 
to look for him. With great dignity he explained : 

“I must apologize sincerely for not being punctual, but I was 
not allowed in.” 

He then proceeded to assess all the facts that had come before 
the court and brought his speech to a close as under : 

“After the elections in July 1932 it was clear that Hitler would 
— ^that he was bound to— seize the reins. Schacht had previously 
warned the other countries of this contingency: he did not there- 
fore do anything to bring it about. After Hitler had assumed power 
there remained for him, as indeed for every German, only two 
alternatives : either to hold himself aloof or to take an active part 
in the movement. The decision which he made at this parting of 
the ways was a purely political one, devoid of any criminal intent. 
We estimate and weigh the reasons that prompted other countries 
to co-operate with Hitler in far more intensive and pro-German 
fashion than they had done with Germany’s previous democratic 
Governments: in exactly the same way we must recognize the 
bom fides of all those Germans who believed that they could be of 
greater service to their country and to manldnd by joining the 
movement— i.e. eitlier within the Party or in some official capacity 



^00 My First Seventy-Six Years 

such as the Civil Service — ^rather than as disgruntled outsiders. 
To serve Hitler as a Minister and as President of the Rcichsbank 
was a political resolve, the political wisdom of which wc may 
question now — ex post facto — but which was completely lacking in 
criminal character. Schacht has always remained staunch to the 
fundamental reason for his resolve, namely, to face up to every 
kind of radicalism and be in a position to combat it effectively. 
The world, though well aware of his attitude, gave him no sign, 
cither to put him on his guard or support him in his resistance. He 
saw only that the world continued to put its trust in Adolf Hitler 
far longer than he himself did, and accorded him honours and 
successes in matters of foreign policy which made Schacht’s work 
increasingly difficult when for a long time it had already been 
directed towards the overthrow of Adolf Hitler and his rdgime. 
The courage and consistency with which he pursued this fight 
must make it seem like a positive miracle that he is alive — ^that it 
was not until after the 30th July 1944 that fate overtook him in the 
form of the concentration camp, and that he was in danger of 
losing his life, cither at the hands of the People’s Court or of some 
S.S. drumhead affair. Schacht is sufficiently clever and self- 
critical to know that, viewed from a purely political angle, his 
portrait will figure in history — at any rate in the immediate future 
— blurred by Party favour and Party hatred. In all humility he 
surrenders to the verdict of history, even though one historian or 
another may describe his political attitude as wrong. It is in all the 
pride of a good conscience, however, that he surrenders to the 
verdict of this High Court. He faces his judges with clean hands. 
He surrenders to this Tribunal in confidence, as he has already 
stated in a letter addressed to tire court prior to the opening of 
proceedings. In this letter he .states that he welcomes the chance to 
demonstrate to this court, and to the world at large, his conduct 
and his actions, and the reasons that motivated him. He surrenders 
to this court in confidence, for he knows that Party favour and 
Party hatred will carry no weight with them. While himself 
recognizing the rclativeness of all political action in such difficult 
times, he is, nevertheless, full of self-assurance and confidence in 
respect of the criminal charges preferred against him — ^and rightly 
so. For it does not matter who may be adjudged to be criminally 
responsible for this war, and for the cruelties and atrocities per- 
petrated during this war: to him — after the minutely accurate 
establishment of the actual facts in this court, Schacht can exclaim 
in the words addressed by William Tell to Parricida, the Emperor’s 
murderer: ‘Unto the Heavens I raise my stainless hands, my 
curse upon thee and upon thy deed!’ 



The Niimberg Tribunal — II 501 

“I therefore move that Schacht be adjudged not guilty of the 
charges against him, and that he be acquitted.” 

It is a matter of history that the International Court at Niimberg 
did acquit me. The world had testified to my innocence before 
what was probably the most severe court of Justice that has ever 
existed. After this Tribimal had acquitted me and pronounced 
me innocent of any crime, I fell into the hands of my fellow- 
countrymen. 



CHAPTER SIXTY 


The Denazification Trilnmals 

I MMEDIATELY after the conclusion of my trial at Nurnberg, 
as described in the two preceding chapters, the psychoanalyst 
Gilbert paid me his customary visit in order to check up on my 
mental condition. He could find precious little abnoriiuil about me. 
I nstcad, we drifted into conversation in the course of which I asked : 

“Why doesn’t the American Prosecutor withdraw the charge 
against me? After all, there was no question of a conviction; that 
was incontestably established at the trial.” 

Gilbert shrugged his shoulders, but did not answer. 

“You might pass the suggciition on to Jaclcsou, anyway”, I 
insisted. 

The psychoanalyst from Vienna with the American n.'ime 
promised to do so. Presumably he kept his word and mentioned 
my proposal to Jackson; but the American Prosecutor declined. 

I was frequently reminded of tliis conversation when, years 
afterwards, 1 experienced in my own person the desperate clForts 
of a group of helpless Americans to bring about a subsequent 
verdict of “Guilty” against me. Not until later was I to learn the 
actual ins and outs of that business. 

Pour weeks elapsed between the trial and tbe verdict, during 
which we waited and did nothing. A humane feature of this 
Tribunal was that they allowed us to sec our families. 

Only someone who has been behind prison bars and in concen- 
tration camps will understand how I felt when I stood face to face 
with my wife and my two daughters, Konstanze and Cordula, for 
the first time in more than two years. Konstanze, very like her 
mother in appearance, was five years old and could only remember 
me vaguely. Cordula — always called “Bee” — was a year younger 
than her sister, a typical Schacht; she had no idea what her father 
was like for she was exactly one and a half years old when the 
Gestapo arrested me, 

Our meeting took place in the same room where we prisoners 
held consultations with our lawyers. That is to say, we were 
separated from our families by wire netting and glass parti- 
tions, with a stern-faced American Military Policeman seated in 
attendance, loaded pistol in hand. 



The Denazification Tribunals 503 

It is easy to imagine how we felt. My wife, to whom I was bound 
by the closest of ties, was torn with anxiety lest I should be con- 
victed, The children, who understood nothing, gazed blankly at 
me. Cordula saved the situation. So far as she knew this was the 
first time in her young life that she had seen her father. Suddenly 
she stood on tiptoe and whispered through the grille; “I like you 
very much.” 

It was like a message from another world. 

Then the children receded into the background for now, for the 
first time, I learnt from my wife all she had gone through since my 
arrest. 

Comparatively speaking, she had not fared too badly under the 
National-Socialists — if one excepts the constant anxiety resulting 
from the verdict of the “People’s Court” against the conspirators 
of the aoth July 1944. Later she told me that, to a certain extent, 
we owed it to Hitler that we were able to preserve some of our 
possessions. For, since the Gestapo confiscated part of the con- 
spirators’ property, she had sent off certain pictures and pieces of 
old furniture to friends in Munich, even before the end of the war. 
The large copies she had had to leave behind as by that time there 
was no packing material available for them. 

In April 1945 my wife had remained at Giihlen, as we had 
agreed. Battles between Russians and Germans had been fought 
on our estate. In my park alone sixteen German soldiers lay 
buried. My wife had contrived to hold her own against the first 
Russian troops. As soon as a decent orderly body of soldiers had 
been installed on the estate she had sent a letter to the Russian 
Commander-in-Chief, General Zhulihov, on whose orders one of 
his adjutants had been sent to fetch her, and all my documents 
had gone with her. For six weeks she had been kept prisoner at 
Russian headquarters, partly in Karlshorst, partly in Friedrichs- 
hagen, east of Berlin. Both accommodation and food were ade- 
quate. She was, so they informed her, treated in the same way as 
a captured general. 

She had been told at the time of her arrest that there was a 
prospect of her being sent to Moscow. But finally, after going 
through all my papers and thoroughly cross-examining my wife, 
they obviously abandoned the idea. My wife, together vnth my 
papers, was escorted back to GUhlen and provided with a telephone 
with instructions to give the alarm immediately in the event of her 
being molested in any way by undisciplined troops. 

Wliat the Gestapo in its time had omitted to do the efficient 
Russians made up for; they went all around the house and the 



504 My Seventy-Six Years 

vicinity with mine-detectors and in so doing discovered a deed-box 
which I had buried there years ago. It contained a whole lot of 
anti-Hitler books which had been published abroad, and a manu- 
script of mine completed in 1942 in which I had systematically 
described — and rejected — National-Socialism; all of them works 
which, prior to the capitulation, would have deeply incriminated 
me. Later, in Kransberg, I endeavoured through my American 
interrogator to recover die deed-box and its contents from the 
Russians, for this manuscript was bound to be of the greatest use 
in securing my discharge. Unfortunately I have never seen or 
heard anything more of it. The Russians were obviously not 
interested in my exoneration. 

My wife had stayed on in Guhlen for the next few months and 
carried on with the remaining available labour until the introduc- 
tion of the so-callcd Land Reform in the Eastern Zone and the 
Communists took possession of the house and estate. In the 
autumn of 1945 she was informed that she must leave Giililen 
within three days. She was allowed to take nothing but her personal 
possessions. She was given an address in Mccldenburg and ad- 
vised to go there. But she smelt a rat and, suitcase in hand, made 
instead for Berlin — a two days* journey on foot. Later she learnt 
that all the inmates of the Medklenburg camp were deported to 
Russia. 

As a next step my vrife then sought pei'mission to move into our 
Berlin home, but the German authorities refused. For several 
weeks she was obliged to spend the night with different friends 
and acq^uaintances until finally she succeeded, as one of the staff 
and under another name, in accompanying a party of children who 
were being sent to the West Zone by a religious organization. 
And there, in the little village of Hollenstcdt on Liineburg Heath 
she met again our children’s nanny and her family. 

That had happened about a year previously. A few days after her 
arrival a British soldier had driven up to the house and ordered my 
wife to go with him. Since he carried a written warrant she was 
obliged to obey and leave the children behind. The British took 
her to Winsen-on-the Luhe where for five months she was “con- 
fined” in a country inn known as “Dammans Gasthaus” run 
by a dignified Lower Saxon landlady named Matliilde Bruns. The 
British ordered her and her husband to keep watch on Frau 
Schacht by day and night. 

“^d what would that be for?” enquired Mathilde in her 
quaint patois, a mixture of High German and Plattdeutsch. 

“She might commit suicide”, was the British reply. 

“Did you ever think of committing suicide?” I interrupted. 



The Denazification Tribunals 505 

“Not for a moment!” she answered. “But the British probably 
imagined that the one idea of a woman in my position would be 
death. In any case they wanted the Bruns to stand surety for me.” 

The Bruns refused, for reasons easily understood. They said 
they were far too busy with farming and housekeeping to carry out 
an inspection of their prisoner’s room every two hours during the 
night. Eventually they compromised. My wife was given a room 
with a wooden partition. On the other side of the partition was the 
bed in which the Bruns’ daughter slept. This girl was instructed 
to report at once should anything unusual happen in my wife’s 
room. “They meant, she was to report if she heard me in the 
death-throes ”, said my wife. 

After a few days this state of affairs got on her nerves. She went 
to see the British Commandant who, as it happened, was himself 
a bank ofEcial and a secret supporter of mine. 

“Do you know what all this is about?” she asked. 

The Britisher shrugged his shoulders, smiled, and said : 

“If I knew, I’d tell you.” 

At last, after five months, she received permission to return to 
her children at Hollenstedt. Owing to lack of space, however, she 
was unable to remain in the same house and she was therefore 
allotted a summer-house, built years previously by a retired naval 
officer, at Seppensen near Buchholz. The entire house was no 
bigger than sm ordinary-sized room. It was divided into three 
rooms, one of which served as a sort of dolls* kitchen. Water had 
to be fetched from another house over two hundred yards away. 
The door of the living-room gave directly on to the open. The 
closet was some hundred yards distant in the wood. “Romantic 
atmosphere of Lfineburg Heath” as my wife put it. 

Here she stuck it for two winters and one summer. The pur- 
chase of the barest essentials meant a walk of at least two miles. In 
addition she possessed not a penny and in those first chaotic 
months it was extraordinarily difficult to establish contact with 
German and foreign friends who would have been able to help her 
with money or “CARE”* parcels. Setting all those activities in 
motion was a very slow business. 

Such was my wife’s report. Now at last with tears in her eyes 
she sat opposite to me in the Nlirnberg prison, tortured by the 
possibility of my conviction and full of anxiety for her own future 
and that of the children. She had reached a pessimistic state of 
mind, thanks to the tissue of lies sent to the German Press by the 
Allied reports of the trial, in particular by the notorious Gaston 
Oulman. Of all the reasons conducive to a favourable verdict 
* Committee for American Recovery in Europe. 



5o6 My First Seventy-Six Years 

not one appeared in the newspapers or was mentioned over the 
radio. 

Naturally I had no idea of all this and expressed the greatest 
confidence without managing to convince her. She probably took 
my optimism for a delusion, so that, notwithstanding all our joy at 
seeing each other again, this first time together was not without a 
painful undercurrent. I saw my wife on other occasions during 
the following days until visits had to be suspended. 

At last the first of October arrived, the day of my acquittal. 

Not until after that day could we embrace once again for the 
first time in years. 

The verdicts “Guilty" or *‘Not Guilty" were pronounced in the 
presence of all the accused. One and all received their sentences 
with expressionless faces. One might have expected the first “Not 
Guilty" (my own case) to have released some display of emotion. 
On the contrary; I m3rself andalltlte other prisoners maintained 
their steely composure. 

After the verdict wc were escorted to lunch, the three of us who 
were acquitted — Fritzschc, von Papen and myself — in a separate 
room. 

In the afternoon there followed the pronouncement of the 
sentences, when each prisoner was led up individually before the 
judges. I was not present. 

In the meantime the three of us were taken back to prison and 
told to present ourselves before a group of journalists. I protested 
at first against being put on exhibition but could not very well let 
my companions down. 

A great hall was packed with pressmen. American .soldiers 
offered us candies, drinks, cigarettes. The jouimalists asked a lot of 
unimportant questions to which we gave equally unimportant 
answers. The whole thing was a superfluous — and to me very 
unpleasant — ^spcctacle. 

The only remarkable thing about it was the mood of the foreign 
Press which immediately veered in favour of Hans Fritzsche. 
Interesting to me personally was the way Louis Loehner — ^whom 
I had always assumed to be fundamentally well-disposed towards 
me— -remained ostentatiously at the back of the crowd and took 
no notice of me. “jEi tu Brute!" I thought, and remembered the 
times when Lochner, just as ostentatiously, had emphasized his 
friendly feeling for me. 

All too soon I was to learn what was afoot. Fresh troubles, fresh 
beastliness awaited me. 

Some of the provincial Ministers then in office publicly voiced 



The Denazification Tribtitials ^aj 

their indignation at my Niirnberg acquittal. At their head was 
Dr. Hdgner, the Bavarian Social-Democratic Minister who, as 
witness, attended the execution of those condemned to death. 

In the Press and on the radio the Bavarian Government an- 
nounced that it would immediately arrest me as soon as I quitted 
the Niimberg jail. I was now to be brought before the German 
Denazification Tribunal. 

I had informed Colonel Andrus of my intention to go to the 
British Zone. Although the International Military Tribunal had 
decided that I was to be released at once the Colonel demanded 
that I should first obtain an entry permit for that Zone, I was 
urged to remain voluntarily in prison until I had received this 
permit. I agreed, since I should have been arrested by Dr, 
Hhgner the moment I set foot in Niirnberg. A request for an entry 
permit addressed to the Commander-in- Chief of the British Zone 
remained unanswered. In order to safeguard himself Andrus 
submitted a paper for my signature in which I declared that I 
remained in prison of my own free will. I signed it. 

After three days, however, I had enough of this intrigue. I 
demanded my immediate release and was again detained by Andrus 
from early morning until twelve o’clock at midnight, ostensibly 
because they were awaiting some possible means of conveyance. 
The whole thing was a put-up job. 

Finally, at midnight, I was put into a goods van and driven to 
the house where my wife was billeted when she stayed in Niirn- 
berg. As I was about to enter two Bavarian C.I.D, men standing at 
the door announced that I was under arrest and forbade me to 
leave the house. My liberty had been of short duration — ^from the 
American goods van up to the front door. 

My wife was not at home. Late that afternoon she had been to 
my lawyer to take steps to secure my final release from prison, and 
since curfew had sounded in the meantime, had stayed the night. 

At about two o’clock in the morning Stahl, the Niirnberg Chief 
of Police, arrived and intimated that I was to accompany him at 
once to the nearest police-station. There was nothing for me but to 
obey. There the Chief of Police gave orders that I was to be taken 
to prison. Now, however, I raised such hell and swore that all those 
concerned should answer for it that Herr Stahl was compelled to 
get in touch again with the Americans. One-and-a-half hours later 
I was taken back to the house where my wife lived, though I 
remained under surveillance. 

On the morrow I had a visit from one Camille Sachs, a former 
Landesgerichtsrat of Jewish origin who later became Bavarian 
Secretary of State in the “Ministry of Liberation”. He informed 



508 ^ly First Seventy-Six Years 

me that I was to be brought before the Niirnberg Denazification 
Tribunal, and on the following day handed me the Prosecutor’s 
Resolution on the opening of the proceedings. 

Then matters took a new turn. The next morning an official 
from the Bavarian Ministry told me, in the presence of my lawyer, 
Dr. Dix, that the Bavarian Government had agreed to allow me com- 
plete freedom of movement throughout Germany, on condition 
that I reported to the police from time to time and notified them of 
any change of address before undertaking a journey. A minute to 
this effect was drawn up which was signed by my lawyer, the Ministry 
official and myself, and of which a copy was handed to us. 

Thanks to this gratifying document I was able the following 
morning to inform the American Commandant and the Nurnberg 
Chief of Police that I intended to leave their inhospitable Bavaria 
and betake myself to my wife’s permanent home at Seppensen, 
stopping en route to pay a short visit to my friend Rcusch at his 
country place near Backnang in Wiirttemberg. 

To go through Wurttemberg on my way from Bavaria to Lower 
Saxony was, as it turned out later, a great mistake on my part. 
The Wiirttembergers, with whom I had nothing whatever to do, 
proved to be even more uncouth and inconsiderate than the Bavar- 
ians. In fact, anyone reading the following pages will have a vivid 
picture of Germany at the time of le Roi Soldi when every petty 
princeling did what he pleased in his own domain. In my own 
case Wiirttemberg’s petty princeling was one Rcinhold Maier, the 
Prime Minister of the “petty State”. 

We sent our children and their nanny on ahead and set off in a 
borrowed car. We arrived at my friend’s house and were actually 
having coffee with him and his daughter when some members of 
the Stuttgart police suddenly burst in. Despite all protests, despite 
the Bavarian laisses-passer, they arrested me and that same evening 
handed me over to the Stuttgart jail to be detained on remand. 

Next day too, all protests were again unavsiiling. Notwith- 
standing the fact that Denazification proceedings against me had 
already been started in Niirnberg and that, from the point of view 
of the Denazification Law, there was nothing whatever about me 
which could apply to Wiirttemberg, I was kept in custody and 
new proceedings instituted against me. After a lengthy period of 
preparation these took place at lire end of April 1947 and lasted 
some twenty days. Although my entire life history and my anti- 
Hitler activities were set forth in detail, this court actually con- 
trived to sentence me, as an “Arch-criminal”, to eight years in a 
labour camp. 

After sentence bad been passed I was transferred to Ludwigs- 



27 /C Denazification Tribunals 509 

burg Internment Camp, There at least I was no longer in solitary 
confinement but in the general cells. My appeal led to new pro- 
ceedings which opened before the Ludswigsburg Court of Appeal 
in August 1948. On this occasion the judges included an academi- 
cally-trained President and two fully qualified lawyers. The pro- 
ceedings resulted in my being acquitted. On the 2nd September 
1948 1 was at last able to set out on the road to freedom. Another 
two and a half years had elapsed following my acquittal by an 
International Tribunal before the German tomnoddies realized 
that one cannot deliberately tamper with the law. And even after 
this I was by no means a really free man; for I was subsequently 
“confined” for five months by the British occupying Power, and 
it was two years before I finally emerged from the jungle of 
German post-war jurisprudence. 

But to recount these events seriatim. Some little while after I was 
first condemned to eight years’ labour camp I became so seriously 
ill that I was taken to the Ludswigsburg Prison Hospital. There I 
set to work on a manuscript which was published later by Rowohlt 
under the title Account Settled, At the time, however, I had no idea 
what would happen to my MS. 

The Prosecutor at my Stuttgart trial was a man named Ballerin 
who was supported by a second Prosecutor, a Jew by the name of 
Marx. This man had remained completely unharmed during the 
whole of Hitler’s rule, which was persumably why he considered 
himself justified in exercising a peculiar severity. At any rate he 
very soon changed parts, ousted Ballerin from his position as 
Chief Prosecutor and achieved the lion’s share in the sentence 
which was eventually pronounced against me. 

In the meanwhile I was learning that this sentence was by no 
means in accord with popular opinion. The policemen who acted 
as my warders had quite different ideas from those of Messrs. 
Ballerin and Marx. They obviously considered the whole business 
was preposterous. So one day, dxiring a fairly long interval in the 
proceedings, they drove me to a quiet little village, stood me a 
bottle of the best wine and dranlc my health. A simple sense of 
justice may have told them that it was unfitting that the man who 
was having to foot the whole bill — i.e. myself — should have no 
share in the good things which the “High” court enjoyed every 
day. During my twenty-days’ trial the said court consumed no fewer 
than six hundred litres (between six and seven hundred pints) of 
good Swabian wine. 

Taking it all round I had many and frequent pleasant experi- 
ences with policemen and prison warders; beginning with the 



510 My First Seventy- Six Years 

S.S. men who sang Stille Nachl, heilige Nacht, to the American 
Mounted Police who spoilt me with gifts of real coffee when 
Colonel Andrus dockbd me of it, and again to those Swabian 
policemen in Stuttgart and subsequently in the camps, who 
were my first and most appreciative public when my pamphlet 
Account Settled came out. Except for Party squabbles and 
bickerings they were obviously interested to learn for the first 
time and from a qualified source the truth about the immediate 
past. 

Pehind all the secret intrigues and machinations of that period 
— as I learned in course of time — ^were the American circles around 
General Clay. During those twenty-three months I brooded a good 
deal over the victors’ sometimes very complicated psychology — for 
the simple reason that again and again I experienced in my own 
person the unpleasant fact that, notwithstanding the Nurnberg 
acquittal, they would very much like in some way or another to 
bring in a subsequent verdict of “Guilty”. 

'Phis persecution started immediately after the Nurnberg 
verdict. The American court handed me over directly to the 
Bavarian police, which they had no right whatever to do. General 
Clay stated publicly that my imprisonment in Wtirttemberg was 
perfectly lawful although the Government of Wiirttemberg itself 
later acknowledged that it had been illegal. 

What the Prosecution at the Niirnberg trial had failed to 
achieve was to be accomplished by the Denazification proceedings. 
I was perpetually conscious that the officers of the American Army 
of Occupation exercised considerable influence in this connection. 
For a time the German authorities seemed disposed to counten- 
ance my release on health grounds; but this was frustrated by the 
intervention of a medical commission specially sent from American 
headquarters. This commission spent five minutes with me with- 
out making the slightest attempt to examine me medically and 
— ^contrary to all other previous medical examuiation.s — without 
more ado pronounced me fit to remain in prison. 

When I was recounting this incident a charwoman standing 
nearby started to sing : 

“ Nothing lasts for ever, all things pass away, 

First it was the FUhrer, and soon it will be Clay.” 

An application for leave which I sent in — on the advice of 
the doctor attending her — because my youngest daughter was 
dangerously ill with diphtheria was granted by the German 
authorities and refused (“sgd. Friedemann”) by the American, 



The Denazification Tribunals 51 1 

Even on the very day of the Ludwigsburg acquittal the American 
Authorities sought to prevent my release. 

Such things did not happen by chance — they revealed a set 
purpose. In order to undei'stand them it is necessary to ask why, 
indeed, the Americans put me in the dock at Niirnberg in the first 
place. In my view the fact that a certain proportion of German 
emigrants for some reason or other regarded me as their enemy is 
not sufficient to account for it, although I have had ample oppor- 
tunity to experience the hatred of these people. All decent Jews in 
the banking and business world knew that, both personally and 
materially, I had helped very many Jews to emigrate and given 
them every possible support. 

The only explanation for the charges preferred against me at 
Niirnberg must have resulted from the wish expressed by Chief 
Prosecutor Jackson during the preparations for the trial — ^to 
present the whole of National-Socialism as a long-term war 
conspiracy. All the leaders of German business and economy must 
be included in this conspiracy. That is why the first point in the 
Nurnberg indictment had been “participation in a conspiracy to 
bring about war ”. That is presumably also why, after the collapse 
of Germany, all the leaders of German business were immediately 
arrested, irrespective of whether they were or were not members 
of the Party. 

The aim was to charge the entire German business world with 
complicity in the National-Socialist policy and with the crime of 
preparing for war. For the Prosecution this proof of “conspiracy” 
was the main theme and the main object of the first great Nurnberg 
trial. 

Since it was not possible, for reasons of space, to include the 
whole vast crowd of German business leadei's, they pitched on the 
man who had been the head of the German banking system — 
namely, myself — and the man who had been at the head of 
German industry — namely, Krupp. 

The coupling of these two persons, Krupp and Schacht, with 
the remaining accused was to furnish proof of German industry’s 
participation in the conspiracy. Only firom this attitude on the part 
of the Prosecution is it possible to understand how my acquittal 
constituted the greatest disappointment and most crushing defeat. 
The result was that the proposed subsequent proceedings against 
leading financiers and industrialists — in so far as they could not be 
charged with direct war crimes — ^were never even instituted. 

Had the Prosecution succeeded in securing my conviction at the 
Niirnberg trial, or had they succeeded at least in getting rid of 
me during the Denazification proceedings, it would have been 



512 My First Seventy-Six Years 

easy to pillory many other loaders of German industry. Sueh a 
result might jjerhaps have helped to holster up the threadbare rea- 
sons given to the Germans for the way those responsible set about the 
destruction of (Jerman iirdiistry during the period that followed. 
It is humiliating to recall that certain political circles, blinded 
by their obsession for Nazi-hunting, were of great assistance to 
the Allies. 

At first my acquittal on the ist October 1946 undoubtedly had 
the opposite effect. Intelligent groups among the German people 
began to perceive that the persecution of leading industrialists by 
the American Prosecutor was not aimed at the seizure of the real 
criminals, but was intended to justify spiteful and senseless 
attacks on German industry. People realized that the wholesale 
dismantlings and the removal of capable and expert brains from 
German industry had for its sole object the elimination of German 
competition for good and all. 

So much for the background of my trials. Now for one or two 

amusing details pleasanter to read than those grave and— at 

bottom— melancholy reminiscences. 

During one of my innumerable trials the Prosecutor suddenly 
confronted me with the statement that in November 1932 I had 
attended a scientific Congress in Rome at the invitation of the 
Royal Academy of Science. 

“Of course you went to Rome in order to contact the Fascist 
Government,’’ 

“Not at all. I had already had dealings with Mussolini as far 
back as 1934 at the request of the Weimar Government.’’ 

“Hut you wanted to renew these contacts on this occasion,’’ 

“That wasn't necessary.” 

“Then why did you go to Rome?” 

‘ ‘ If one has the chance of spending a week in Rome at the Italian 
Government’s expense it is surely easy to understand that one 
accepts such an invitation.” 

“That’s no reason. Tell us frankly why you went to Rome,” 

“Because I wanted to sec Rome.” 

Next morning the Public Prosecutor solemnly rose to his feet: 

“I have some information for the High Court. We have ascer- 
tained that the accused was already acquainted with Rome. His 
reply may therefore be regarded as contempt of court.” 

And another episode : 

“Prisoner at the bar, you maintain that you never made a 
speech or wrote anything for the National-Socialist Party prior to 
1933.” 

“I do. Neither before nor after 1933 have I ever done.so.” 



The Denasification Tribunals 513 

With a triumphant gesture the Public Prosecutor held up a little 
book. 

“I have here a book entitled Brennende Bevdlkerungs^oHtik 
{The Burning Question of Population) which appeared in 1932 in the 
Eher edition, a series of writings published by Gottfried Feder. 
Herr Schacht, do you still deny it? The author is Dr. H. Schacht.” 

I had known that book for a long time. 

“Mr. Prosecutor, I regret to have to disappoint you. The book 
is not by me but by an entirely unknown namesake whose Christian 
name evidently also begins with H.” 

Next morning the Public Prosecutor had another solemn 
announcement to make. 

"I have to inform the court that we enquired from the pub- 
lisher; the book exhibited yesterday is, in fact, not the work of the 
prisoner.” 

Grins and an embarrassed silence on the part of the public, 
which obviously got on the Public Prosecutor’s nerves. He 
prepared to launch another attack: 

“Prisoner at the bar, you must nevertheless admit that, if the 
book had been your work the results would have been very painful 
for you,” 

When, during the Liineburg proceedings, I explained that I had 
joined the Hitler Government in order to try to arrest the evil and 
guide the National-Socialist policy into the path of moderation, 
one of the assistant judges said: 

“How dared you — ^little lion that you are — venture into the 
big lion’s cage?” 

“You forget, sir,” I replied, “that I did not venture in as a 
little lion, but as the lion-tamer.” 




Part Eight 

LIFE BEGINS AT SEVENTY 



CHAPTER SIXTY-ONE 


Free Once More 

W HEN I was released from Ludwigsburg camp on the 
2nd September 1948 I had exactly DM. 2.50 in my 
pocket. A kindly fellow-prisoner had entered my name 
in the list of workers during the last few days so as to be able to 
hand me at least a small sum for travelling expenses. My wife and 
children had been living until now partly on assistance from 
friends, partly on charity. 

I no longer possessed any bank balance or securities of any 
kind. My various accounts had been carried by the Rcichsbank 
in Berlin, and, as I now learned to my sorrow, the Reichsbank had 
failed to transfer any photographic copies to a place of safety in the 
West. My entire fortune was lost; there were no means even of 
ascertaining what I had once possessed. 

My Gtihlen property was in Communist hands. Three small 
dwellings that I owned in West Berlin, each housing a single 
family, were partly bombed, partly requisitioned at the time the 
trials began. I was heavily in debt to my lawyers who had defended 
me at Nurnberg and in Wiirttemberg. 

I was so completely destitute that I gladly accepted the offer of a 
friendly British journalist to take my wife and myself to Seppensen 
in his car. 

Naturally I had to look around at once for some means of earn- 
ing in order to ensure our livelihood. My wife, in the meantime, 
had already made contact with the Hamburg publisher Rowohlt, 
who evinced great interest in the book I had written in the prison 
camp. Only three days after my arrival at Seppensen he came to 
see me ; we fixed things up and I entrusted the manuscript to him 
for publication. Although written during the trials and still there- 
fore in strongly defensive vein, the book ran into a quarter of a 
million copies. The first foundation was laid for the support of 
my family. 

Unfortunately it soon became evident that our tiny house at 
Seppensen had room only for my wife and one child at the most. 
Cordula at that time was at Wangen, Allgau, with an injured 
knee : the doctors suspected tuberculosis of the bone. 

We needed a larger home, somewhere near our sick child. We 



Free Once More 


517 

found what wc wanted by chance at Icking near Wolfratshausen. 
The owner’s name was Hanna Andresen — “Aunt Hanoi” for 
short. 

Having settled the question of place, we were faced with the 
question of transport. I went to Bavaria and found a carrier at 
Wolfratshausen who agreed to move our possessions from 
Seppensen to Icldng. In order to save my train-fare one of Aunt 
Hanni’s armchairs was installed for me in the body of the lorry, 
and we set off. 

It’s a long way from the Isar Valley to Liineburg Heath. I spent 
the night dozing in my armchair while the lorry drove via Niirn- 
berg, Bamberg, Kissingen, through Franconia into the Rh3n 
district. The drivers pulled up beyond Bad Briickenau at the 
so-called Rhfin Cross, settled themselves comfortably and slept for 
two hours. 

After a time I awoke, looked outside, saw the sleeping drivers 
and decided to stretch my legs a bit. I had gone some little way 
into the wood when I suddenly heard the motor rewing-up. I 
shouted, waved, ran — ^to no purpose. The men had driven off 
without looking to ace how their passenger was. 

It was seven o’clock on a most unpleasant November morning. 
Three woodsmen who were coming that way enlightened me as to 
the whereabouts of the nearest railway-station, which proved to 
be Fulda, about four hours’ walk. I thanked them and started off. 

At the second village I met a car and got a lift to Fulda, tele- 
graphed home that I should be coming by rail, boarded the next 
train and reached Seppensen about two the following morning, 
having walked from Buchholz. So far there was no sign of the 
lorry drivers. 

We turned in, somewhat comforted by the thought that we 
should soon be sleeping in a real bed at Icking. Early next morniog 
the lorry drew up at our house. The drivers were delighted to 
find me none the worse. Not until they were about sixty miles 
from the Rhon Cross did the brilliant idea occur to them to 
sec how their passenger was getting on — and lo and behold — ^be 
had disappeared! They had at once notified the police and had 
telephoned in all directions, 

“Were you never in the Army?” I asked one of them. 

“Yessir!” he replied smartly, 

“Then don’t you know that before setting out on the march you 
have to make sure the company is at full strength?” 

He said nothing. We began to pack. 

Ever since my arrival at Seppensen journalists had, so to speak, 
camped on the doormat. This morning, too, one of them turned 



5i8 My First Seventy-Six Years 

up, watched our preparations with interest, asked the usual 
questions, and then suddenly enquired if we already knew that 
Wurttemberg had not recognized my acquittal. 

For a moment I thought he was trying to be funny. But 
there was our neighbour, the owner of a radio set, coming over 
to confirm the report: Dr. Schacht was being sought for by the 
Wiirttemberg police. 

“Go to Icking with Konstanze — I shall stay here for the pre- 
sent,” I said to my wife. I had had more than enough of the South 
German Denazification frenzy during the past two years. 

She realized that in the circumstances it was the best thing to 
do, got into the car with the child and left late the same afternoon. 
They reached Icking somewhat exhausted twenty-four hours 
later. Somewhere en route they had witnessed an accident — a 
lofry had run over a little girl, crushing her cheat. The child had 
lain bleeding at the side of the road and my wife had been at pains 
to divert Konstanze’s attention to something else. But at last they 
arrived at Aunt Hanni’s, who gave them a wonderful supper 
without even mentioning the subject of money. Finally they went 
to bed, completely played out. 

It was a memorable night. Since we possessed no suitcases at 
that time we had had to cram everything into cardboard boxes 
which looked singularly out of place in the Andresens’ fine house. 
Parcels and boxes were everywhere. It worried my wife, and she 
went to sleep determined to tidy everything away in the morning. 

Towards midnight there were loud knocks on the front door and 
the outside shutters. My wife, who was sleeping on the ground 
floor, started up, put her head out of the window and shrank back, 
dazzled. “It was like the ‘Niimberg lighthouse’”, she told me 
afterwards. “Wherever one looked there were searchlights.” 

Meanwhile, Aunt Hanni had arrived on the scene in her dressing- 
gown and had opened the front door. Outside, half a dozen voices 
kept up a persistent shouting: “Open! Police 1 Openl” 

“We want Dr. Schacht — ^we know he is here!” said the leader 
of the flying squad. 

About thirty armed police swarmed in and proceeded systemati- 
cally to comb the Andresens’ house. From cellar to garret they 
searched every room, every cupboard, every recess. They even 
insisted on the refrigerator being opened, although it was built 
into the wall. 

Aunt Hanni was somewhat nervous — ^not that the police would 
find me, as I was not there, but for another reason. Like very many 
Germans at that time she occasionally managed to obtain' food 
“oflf the ration”, and only that day had hung an appetizing calves’ 



Free Once More 


519 

foot on the balcony under her bedroom window. So she got very 
cross when the policeman who had been searching her bedroom 
looked as though he meant to go out on the balcony. 

“Surely you can sec there’s nobody there,” she snapped. 

The policeman glanced out of the window, saw no sign of Dr. 
Schacht and gave it up. The calves’ foot was never discovered. 

The son of the house, a law student, took a particularly fiendish 
delight in egging the policemen on. He drew their attention to 
various hidey-holes in which the object of their search might 
possibly be concealed, and begged them to make quite sure he was 
not there. Finally, he indicated the space between the attic and the 
outside wall, a low slip of a passage running' all around the upper 
part of the house. The policeman contented himself with shining 
his pocket-torch inside. 

“You evidently have precious little sense of duty,” remarked 
Andresen junior bitingly. “Do please make a proper search.” 

The policeman lay down on his stomach and obediently crawled 
all round the house. 

All the time the house was being combed the Andresens’ tele- 
phone was cut off by the post office so that the owners and my 
wife should on no account be able to protest to the Government by 
telephone. Later we learnt that the efficient Bavarians had actually 
circulated my name, together with an exact description of me, in 
the “list of wanted persons”. 

In order to appreciate to the full this latest piece of bumble- 
dom it is necessaiy to explain that — ^according to the inhabitants 
of Wolfratshausen — only the previous week there had been a 
burglary in the parish. The inmates of the house had called the 
flying squad. Hours later a single policeman had turned up on a 
bicycle with a dog and had leaned the bike up against the gate while 
he and the dog entered the house. The burglars had long since 
disappeared. When the policeman left the house he was con- 
fronted with the fact that they had also made off with his bicycle. 

In my case between two and three dozen men with the best 
technical equipment had been detailed for the job. With such a 
force a whole gang of criminals could have been bestowed out 
of harm’s way. 

Some weeks before the above-mentioned police raid I had been 
able to gauge the real feeling towards me in Bavaria as I strolled 
along the streets of Munich shortly after I had been released from 
the camp. My first encounter was with a citizen of Munich in 
leather shorts, who crossed the road and made straight for me to 
■ congratulate me on my release. During our conversation he 



520 My First Seventy-Six Years 

enquired if there was anything he could do for me, I thought for 
a moment and then asked : 

“What sort of thing do you think you could do for me?” 

“Well, perhaps I can help you with a car.” 

“Have you a car?” 

“I have two cars.” 

“ Then you certainly could do me a kindness. I would very much 
like to go tomorrow, Sunday, to see my child who is in a sanatorium 
undergoing medical treatment at Wangen-in-Allgau. Perhaps you 
could drive me there?” ' 

“With the greatest pleasure. I shall be at your hotel with my 
car at nine o’clock tomorrow morning.” 

“But that will take a whole lot of petrol. It’s several hundred 
miles from here,” 

“The petrol just doesn’t come into it. I’m a dealer in mineral 
oils . . .” 

And the next day this splendid fellow actually drove my wife 
and myself to Wangen-in-Allgau and back. 

Soon after this first meeting a man spoke to me on the street : 

“Please forgive me, but a word from you might help to revive 
my business. Will the D-mark remain steady?” 

“What is your business?” 

“I’m an insurance agent.” 

“Then I can appreciate your interest. But I’m not a prophet.” 

The third man, who amused me particularly, was a farmer from 
the mountains who, with a shamefaced smile, sidled up to me 
from behind and burst out, in a strong Bavarian dialect quite 
impossible to reproduce : 

“Excuse me, but aren’t you Dr. Schacht?” 

“I most certainly am.” I said in my best Bavarian. 

“I’m glad you’re Dr. Schacht — eh, but I’m glad . . .” 

“And who may you be?” I asked. 

“Me? Oh, I’m farmer Huber.” Vox popuH. 

After my wife and child had left I remained in Seppensen, a 
grass-widower, and endeavoured to cook something to eat from 
our scanty store. My efforts were not particularly successful. I 
found a sort of milk powder and thought I would make some milk 
soup. I mixed the stuff, poured it into boiling water, and saw how 
wonderfully my soup frothed. Unfortunately I couldn’t drink it. 
I had grabbed a packet of Persil by mistake. 

In the meantime the Wiirttemberg order for the delivery of my 
person had been received in Hanover where they showed a distinct 
inclination — contrary to all law and justice — ^to hand me over 
again to Herr Reinhold Maier as his special prerogative. Once 



Free Once More 


Sai 

again it was a policeman who saved me — ^this time the Chief of 
Police in Liineburg. He told the Government of Lower Saxony 
that he had no legal authority to deprive me of my liberty and 
pack me off to Wurtlemberg. So the order was ignored. 

By now, however, I was sick and tired of the whole business 
and of my own accord asked that I be Denazified. I was seventy- 
one years old ; I had a family Co support and needed that freedom 
to pursue my career to which every German is entitled in a federal 
democratic country. 

As a non-Denazified person I was debarred from following my 
profession — in a word I was condemned either to starve or to 
depend on the charity of my friends. 

As an immediate step I was once again “confined” in the parish 
of Seppensen by the British Occupation Authorities. Incidentally, 
this Iinglish expression has been absorbed straight into the 
German language, practically retaining its original form. 

Unfortunately the inhabitants of Seppensen do their shopping 
in the parish of Buchliolz which, as a “confined” person, I was 
no longer allowed to visit, so that in spite of my release I was 
still in danger of slow starvation. When I made this clear to the 
British they agreed that I should be billeted in Winsen-on-the- 
Luhe — once again in “Dammans Inn”, which was obviously 
destined to be a permanent “place of confinement” for the 
Schacht family. 

“What did you do with yourself all that time?” a journalist 
asked me afterwards. “Work?” 

“I worked on my Denazification case,” I said. “And if you have 
ever done such a thing in your life you will realize that it’s not just a 
spare-time activity, but a whole-time job I ” 

The S.P.D, (German Socialist Party) Government of Lower 
Saxony endeavoured to succeed where Wiirttemberg had failed. 
As Prosecutor they appointed a certain Dr. Becker, a former 
President of the Berlin Senate, who sought to eke out his pension 
with the not inconsiderable fees of a Prosecutor at Denazification 
tribunals. 

In Wiirttemberg meanwhile proceedings against Schacht fol- 
lowed one another in rapid succession. Since Dr. Schwamberger 
— ^my lawyer in Wiirttemberg — and I refused to appear before their 
Denazification court a fourth action was brought, with no better 
result. Finally matters reached a point where a fifth appeal was 
heard in Ludwigsburg, and here at last I found a presiding Judge 
who, together with his assistant judges, pronounced Wiirttem- 
berg incompetent to deal with my case. In giving a new judgment 
he counted no fewer than six infringements of the law on the part 

i8 



522 My First Seventy-Six Years 

of the Wiirtlemberg Government against my person. In the mean- 
time it must have dawned on Prime Minister Maier that, notwith- 
standing Clay’s dictum, my two years’ imprisonment in Stuttgart 
and Ludwigsburg were by no means “lawful”. 

The events that followed form one of the most melancholy 
chapters of the post-war period. To begin with the Wiirttemberg 
Government quashed the verdict of incompetence — this time, 
however, not in order to bring a sixth action against me but to 
indulge in a bit of regular blacimail. 

I can only assume that the innumerable Denazification and 
other scandals gradually got on the Government’s nerves. Be that 
as it may. Prime Minister Maier despatched his permanent secre- 
tary, Strohle, to Dr. Schwamberger, my Stuttgart lawyer, with the 
following very crude proposal: 

“The Government is prepared to recognize the verdict of 
incompetence against Wiirttemberg if Dr. Schacht will give a 
written undert^ng not to institute proceedings against the 
province of Wiirttemberg for right of recovery.” 

I was absolutely furious when informed of this blackmail. But 
Schwamberger, like the far-sighted man he was, advised me to 
consent. I had to acknowledge that there was no such thing as 
justice in Wiirttemberg under Herr Reinhold Maier. 

The way was now clear for a Denazification hearing in Liineburg. 
On the gth November 1950 I made my final speech before the 
Liineburg Denazification tribunal: 

“My Lord President, Your Lordships: 

“I had not really intended to make a closing speech. But since 
the Prosecutor has completely misrepresented my person, as well 
as the motives underlying my work, I will do so. 

“ Both in Niirnberg and in the second Wiirttemberg court I was 
acquitted. Consequently there are two acquittals to be taken into 
consideration. In Niirnberg I had been accused of capital crimes 
by the Allied Nations. During the past four and a half years I 
have had to listen to seven speeches for the Prosecution, all of 
them on the same theme. Even in the present action it was simply 
a re-hash of something we thought we had digested long ago. In 
one respect, however, this action differs from all preceding ones, 
namely in the utterly ludicrous views of the Prosecutor. 

“In the first place I must describe as preposterous the Prose- 
cutor’s interpretation of political matters if he imagines that I 
turned the scale for Hitler’s appointment as Chancellor of the 
Reich. I am supposed to be the man who helped Hitler into the 
saddle. President von Hindenburg was certainly an old man, but 
even you will not talce him for such a doddering idiot as to do only 



Free Once More 


523 

what I considered right. Herr Weis, group chairman of the Social- 
Democratic party, and Monsignor Kaas, chairman of the Central 
party, were neither of them doddering idiots, any more than were 
the four hundred elected members of the German Reichstag. At 
that time all these men were of the opinion that, given due con- 
sideration and retention of democratic principles. Hitler, as leader 
of the strongest Party, was bound to become Chancellor. The 
Prosecutor has been unable to produce any proof that I had any 
direct influence on Hitler’s Chancellorship. You too will have to 
concede that the decision of the groups of people I have just 
named was scarcely likely to be influenced by my opinion. 

“Was the Special Powers Law {Ermachtigmgsgesetz) of March 
1933 my doing? Was the voluntary dissolution of the Parties in 
May and June 1933 my doing ? Did the Churches of both denomin- 
ations render homage to Hitler at my instigation? You see how 
absurd are the accusations made by the Prosecutor in regard to the 
political situation of 1933. 

“But the Prosecutor’s conception of business and economic 
matters I can likewise only describe as beneath contempt. The 
elimination of unemployment, the reviving and reconstruction of 
business, and the deliverance of the people from economic misery 
are supposed to be crimes demanding expiation. I tell you, Mr. 
Prosecutor, that this pronouncement of yours will outlast your life- 
time, and your name, associated with this outrageous allegation, will 
be notorious in every meeting of electors, every political demonstra- 
tion and similar public gathering in every corner of Germany I 

“From the legal aspect, too, the prosecutor’s views are entirely 
absurd. Pie has spoken of the danger of sound public opinion and 
the grave abuse thereof under the administration of justice in the 
Third Reich. The Prosecutor is evidently unaware that, at the 
Cabinet meeting in question, I was the only Minister to oppose 
Hitler when he wanted to declare this legal maxim of sotmd 
public opinion as binding on everyone. I said to Hitler at the time : 
‘Then, Chancellor, you will have to establish a committee 
immediately, who will determine fromi one, case to another what 
constitutes sound public opinion.’ 

“But, gentlemen, we all know too that the people’s sense of 
justice cannot be denied. Again and again it has been proved that 
laws which conflict with the nation’s sense of justice have not en- 
dured. The present Denazification Law has never found an echo 
among the German people: therefore it will not endure. I would 
venture to say that the Prosecutor, with his unjustifiable accusa- 
tions, his distorted version of the situation and his ridiculous 
assertions has dealt the final blow to Denazification. 



524 My First Seventy-Six Years 

“In conclusion, I can affirm that from a human standpoint also 
the Prosecutor has expressed entirely ridiculous views. I won’t 
dwell on his cynical remark: ‘Well, Dr. Schacht looks fit enough, 
so he can’t have been through such a bad time as all that 1 * In one 
respect I must admit he is right — I have such tremendous vitality 
that I can even put up with such a Prosecutor. 

“Gentlemen — I have been in prison for four and a quarter 
years, two of which were spent in solitary confinement. Perhaps 
you have experienced something of the kind and can enter into 
my feelings. But in addition — ^and thank God you were spared 
that — I was for two months in Flossenbiirg Extermination Camp 
and at every step, every lifting of the latch, every knock or other 
sound on the door of my cell, I had to say to myself: Now you’re 
for the gallows. Those two months, gentlemen, are something 
I would not wish even my Prosecutor to go through — I am too 
merciful. 

“In Niirnberg I was charged with capital crimes. And since we 
have a few minutes to spare I may perhaps be allowed to tell you 
a brief anecdote. In his speech for the prosecution the French 
prosecutor, Dubost, dealt first with all the other prisoners, leaving 
me till the very last ; and then he declared I was the worst of the lot. 
You can imagine I was somewhat surprised, seeing that Goering, 
Keitel, Kaltenbrunner, Streicher and others were still present. 
At the end of the speech for the prosecution Professor ICrauss, 
my counsel for the defence, went up to the Frenchman and asked 
him why he had singled out Schacht as a target for. abuse. Then 
this representative of the law smiled and said by way of excuse: 
“Well, you know, the evidence against Schacht was so thin!” 

“Gentlemen! In these present proceedings also the Prosecutor 
has substituted zeal for truth. The province of Wiirttemberg has 
meanwhile established the fact that the actions instituted against 
me were unjust and illegal. I shall of course have to settle accounts 
on that score with the province of Wiirttemberg. But Lower 
Saxony too has repeatedly adopted a policy of delayed action. I 
applied here for Denazification on the 8th November 1948, and 
today, two years later, we have come safely thus far. I have been 
four and a quarter years in prison. During that time my family 
was without means of subsistence. I have been unable to follow 
my profession. I can well imagine that the Prosecutor would 
have been delighted to find me a broken, senile wreck. He was 
mistaken. 

“ Gentlemen 1 You are here to administer justice according to the 
law of Lower Saxony. See that you abide by the wording of that 
law and do not read into it more than is already there. Investigate 



Free Once More 


525 

the fact of my early resistance to Hitler and then pronounce 
judgment. 

“The Prosecutor, gentlemen, has appealed to your courage — 
courage once again to commit an injustice. I consider this insulting. 
I exhort you to administer justice and I appeal to your honour 
and your conscience.” 

Three years after my acquittal by the International Tribunal at 
Niirnberg I was finally acquitted by a German jury. 

A good seven years had elapsed, nearly one-tenth of my whole 
life — during which I had lived under the most varied Govern- 
ments, a prisoner and an outlaw, in my own country. 

Even according to German law of the pre-Hitler epoch, my 
arrest under Hitler was legal and the suspicion of high treason 
justified. That it could not be proved was another story. But the 
Denazification law had been formulated by the occupying Powers 
and foisted upon the rulers appointed by those same occupying 
Powers. From a legal viewpoint it was a monster of injustice andi 
political hatred. The names of those ministers functioning in the 
German provinces, who accepted this law as a German law instead 
of leaving its administi'ation to the occupying Powers, will go 
down in history as inglorious examples of unworthiness. They are 
Dr. Hdgner, the Bavarian Minister, Reinhold Maier, the Prime 
Minister of Wurttemberg and Professor Geiler, Minister in 
Hessen. ^ishall not forget the little scene during the Ludwigsburgfe 
proceedings. Dr. Josef Mtiller, the Minister of State, had been] 
called as a witness. To the Prosecutor’s remonstrance that the 
matter concerned the observance of a German law he replied'.' 
proudly and calmly: “You appear to be unaware, Mr. Prosecutor, 
that I refused to put my signature to that law.”, 

The court acquitted me ! 

Now, once again, I would be able to drive a car, follow my 
profession, go where I pleased, and possess a passport. 

During the period of my “confinement” in Mathilde Bruns’ 
“Dammas Inn” at Winsen-on-the Luhe, the Hamburg publisher 
Otto Meissner came to see me and asked if I would not write 
something for his firm. 

“With pleasure,” I said, “on condition that you can get hold of 
a table for me to write at.” 

Meissner provided me not only with a table but with an entire 
home. 

The firm of Meissner had rented from the Lower Saxony 
Ministry of Justice an old building in Bleckede dating from the 
year 1650 and therefore under State protection as a “building of 



536 My First Seventy-Six Years 

historic interest". It was an ancient rural castle, complete with 
moat, and a barn over the stables which Meissner had fitted up as 
a “residence for authors”. 

It had sloping walls, and to reach it one had to climb a step- 
ladder. The windows of the barn were very small, but State 
“protection” precluded any larger windows being let into the roof 
and the place was therefore somewhat gloomy .by day. Also, the 
roof leaked in several places. For this reason the police had never 
requisitioned the building. 

But it was homelike and comfortable in spite of the fact that 
we were living in an “unpermitted” building belonging to our 
adversaries the Ministry of Justice of Lower Saxony. I fear 
Meissner must have been the recipient of many an unkind remark 
concerning his sub-tenants. If that was so he never gave a sign. 
He was always the same kind, friendly fellow. For the first time in 
endless years I had a real study in which I wrote the book entitled 
in German Mehr Geld, mehr Kapital, mehr Arbeit. In Germany it 
ran into sixteen thousand copies and appeared under the title of 
Gold for Europe in English, French, Italian and Spanish. 

Next to my study — ^where I also slept— -we had a living-room 
where my wife slept, and a room for the two children who attended 
the Bleckede elementary school. Once again we were a real family; 
I was able to repay some of the debts incurred during past 
years and could look forward to the future with somewhat greater 
optimism. 

It was in this house at Bleckede, too, that for the first time I 
received a deputation from Indonesia led by the Minister for 
Economic Affairs of this far-Eastern country, who enquired 
whether I would care to go to Indonesia. 

The time was not yet ripe for a trip abroad — ^we had not really 
given the matter sufficient consideration. Although I did not 
intend to work for an indefinite period in another country I was 
very keen to afford other nations the benefit of my experience. I 
therefore told the deputation that I was prepared, at the appointed 
time, to furnish the Indonesian Government with an expert 
opinion, free of charge, on economic and financial matters if the 
Government would undertake to bear the cost of the journey and 
hospitality. 

Shortly before we left I slipped and broke my arm. Examination 
disclosed a fracture of the upper arm just below the ball of the 
joint, as well as damage to the socket. For seven weeks I had to go 
about with my arm in a splint. 

“Now you will have to have massage, radiant heat and hot-air 
baths ”, the doctor told me. 



Free Once More 


5^7 


I did not have a single massage, radiant heat or hot-air bath, but 
on the day after my medical discharge my wife and I got into our 
Volliszvagen and drove through Germany to Meran where we 
spent four restful weeks, and then on to Rome, where also we 
lingered. Finally we garaged the car in Rome, drove out to the 
airfield and boarded a K.L.M. ’plane for Cairo. Egypt was to be 
our first port of call on our way to the Far East. 



CHAPTER SIXTY-TWO 


Off to the Far East 

W 'lTH our departure by air from Rome I began to pick 
up my former links with the East. It was exactly twelve 
years since I last left Europe. A few months prior to the 
outbreak of World War II. I was on board ship bound for British 
India. What would the East be like today ? 

We slept the night in the ’plane. Early next morning the machine 
glided gently on to the airfield at Cairo. My wife pointed from the 
window to a group of civilians assembled on the airfield, obviously 
awaiting the arrival of our K.L.M. aircraft. “Evidently”, said my 
wife, “there’s a V.I.P. on board.” 

As we descended the steps from our ’plane some Egyptian gentle- 
men advanced to meet us. One of them came up to us, bowed, and 
informed ua that he was there to welcome us on behalf of the 
Egyptian Government, 

“My Government, Dr. Schacht, begs that during your stay in 
Cairo you will consider yourself the guest of our country. We have 
ventured to reserve accommodation for you at the Hotel Semi- 
ramis. Our Minister for Economic Affairs and our Finance 
Minister will be delighted to meet you.” 

I have never looked upon myseff as a Very Important Person 
and did not conceal my astonishment as I accepted this charming 
invitation. We remained for a week in the Land of the Pharaohs, 
The military Putsch which spelt Finis to King Farouk’s monarchy, 
had not yet taken place. Farouk at that time was absent on one of 
his many trips abroad. We wrote our names in the visitors’ book 
at the Royal Palace, 

After the agonizing years we had spent in Germany these seven 
days were like a dream out of the Arabian Nights. We were over- 
whelmed with the most touching hospitality. We were shown all 
the sights of the city; we went for excursions out into the country 
under the guidance of first-class experts, I discussed economic 
questions with members of the Ministries of Economic Affairs and 
Finance, We made many personal friendships. 

We could hardly tear ourselves away from the Tut-ankh-Amen 
treasures which were displayed in the Museum in masterly and 
indescribably impressive fashion. When I was in Cairo for the 



Off to the Far East 529 

first time in 1925, the first discoveries had just been transferred 
to the Museum from the tomb. Even at that time we had marvelled 
at the wealth and the art represented in these treasures. Now, 
however, their numbers had enormously increased. At the sight 
of those wonderful ornaments of gold and precious stones we were 
overcome by the realization of how art has endured eternal and 
unchangeable throughout the whole liistory of the human race. 
The jewels lying there seemed to us to surpass all modem crafts- 
manship. A nation that, thousands of years ago, produced such 
beauty could not possibly be described as backward. 

Dr. Sumitro Djodjohadikusumo, the Indonesian Minister, had 
flown with us from Rome but had immediately continued his 
journey to Indonesia in order to make ready for our arrival. 
During the months that followed Dr. Sumitro revealed himself as a 
supremely cultured, well-informed, active and intelligent states- 
man. He took charge of us in the most cordial manner throughout 
our stay in Indonesia and rendered me inestimable service in the 
preparation of my report on his country’s financial and economic 
situation. 

We spent one night in Karachi, which turned out to be perfectly 
ghastly because of the incredible swarms of flies. We had intended 
to fly via Calcutta to Djakarta, but news of a storm raging over 
Calcutta compelled us, instead of landing there, to come down at 
the military airfield of Allahabad in the centre of Northern India, 
where we had to sleep the night in an Indian hotel. From the air- 
field an ancient Mercedes took us into the city. This vehicle, built 
like a carriage and fitted with an upright steering wheel, had to be 
started up with a crank-handle, but it testified to the enduring 
quality of German manufacture. We drove, if not precisely at top 
speed, at any rate without a single breakdown. 

"In Germany the only time we ever see anything like it is at 
A.D.A.C, festivities — gatherings of old crocks", remarked Manci 
happily. Her spirits sank, however, at the sight of our hotel room. 
We were dog-tired and our one desire was to turn in as soon as 
possible. 

"But one can’t sleep here", she said doubtfully. "No doors to 
the room, only curtains — anyone can come in." 

"You needn’t worry. People don’t steal here, and it would never 
occur to a native to enter a room without knocking and being told 
to come in." 

As a result of this emergency landing at Allahabad our visit to 
Calcutta was limited to one day. I was delighted at the way the 
hotel manager immediately recognized me when Peter Singh 
drove us into the city from the airfield. Peter had lived in 

18* 



530 My First Seventy-Six Years 

Hamburg for years and spoke German fluently with a rich Ham- 
burg accent. Both now and on our return journey he proved 
himself an indefatigable guide and interpreter. 

In the evening Mr. Takur, Manager of the United Commercial 
Banlt, called on me at the hotel. We renewed an acquaintance 
which dated from 1926 when he came to sec me at the Reichsbank 
in Berlin. On behalf of his chairman, G. D. Birla, he invited us to 
be his guests on our return flight from Indonesia, 

Our ’plane took us as far as Bangkok. Here we had to call a 
halt because we possessed no British visa for a temporary visit. 
I applied for this at the British Consulate, but the next morning I 
chanced to get hold of a copy of the Singapore Straits Times, from 
which I gathered that the British authorities in Singapore were 
engaged in debating whether or not to allow us to stay there. In 
the event of their doing so, Dr. Schacht would have to comply 
with the regulations in force for Germans and Japanese and not 
leave the hotel during his visit. The prospect of being “confined” 
in the Singapore hotel, and the tone of the article which smelled 
of the well-known formula “Germans and dogs not admitted”, 
resulted in my cancelling my application for a visa for Singapore 
and deciding to fly direct to Djakarta, though it meant waiting 
six days. 

We took advantage of our visit to contact the German colony 
which had come through the war with its numbers undiminished, 
Siam having successfully refused to imprison Germans or to 
deprive them of their property. We thought it particularly land of 
the Commercial Attachd to the French Diplomatic Mission in 
Bangkok to take such trouble to look after us. He showed us all the 
sights of the city and even obtained permission for my wife to talce 
some snaps of the pagodas within the Temple precincts, which was 
usually forbidden. 

Our visit to Indonesia deserves a separate chapter, so I will 
describe our homeward journey in advance. We stayed three 
weelcs in India during the return trip. Here I felt I was on more 
familiar ground and was reminded of manyincidents of my pre-war 
travels. It gave me special pleasure to show my wife all the places 
which had attracted me then: the famous banyan tree in the 
Botanical Gardens at Calcutta, the Burning Ghats of Benares, the 
Mogul Forts at Fatehpur Sikri and Delhi, and, not least, the Taj 
Mahal at Agra. Mr. Birla’s hospitality enabled us to fly to Daijeel- 
ing at the foot of the Himalayas where, thanks to good weather, we 
had some marvellous views of Mount Everest and Kangchenjunga 
and came across temples and people, both already completely 
Tibetan in type. Darjeeling is the point of entry into India for the 



Off to the Far East 531 

Tibetan traders who come here to buy and sell after trelcking 
through the mountains. 

From Delhi we flew to the Vale of Kashmir on a visit lasting 
several days, and enjoyed everything that had enchanted me twelve 
years previously. We stayed with the Prime Minister, Mr. 
Abdullah, and with my old friend Mehta who runs a big photo- 
graphic business in Srinagar. Again and again we were surprised to 
come across Germans, even in these most distant places. In our 
hotel there were a doctor and his wife; he acted as agricultural 
adviser for the State demesnes. We stayed with Dr. and Frau 
Neuenhofer, whom I had previously visited in the Nilghiris and 
who now lived in Kashmir. 

But ours was not entirely a pleasure trip. From Gulmarg, where 
we had a wonderful view of Nanga Parbat in all its radiant love- 
liness, we went back to Delhi where I discussed economic and 
financial questions with several Ministers. Most memorable was 
the visit of my wife and myself to Nehru and his char mi ng 
daughter. Nehru confirmed the impression I had received from 
others — of a supremely humanitarian, thoroughly wise and en- 
lightened man. Mr. Bajpai, his right-hand in foreign politics, very 
frankly and clearly explained India’s International attitude, which 
is unwilling to subscribe either to the Western materialistic out- 
look or to Russian Communism. It gave me deep satisfaction to 
hear this experienced foreign politician express his views on the 
need for the reunion of Germany’s two sundered halves and at the 
same time emphasize how great was the Indian nation’s faith in 
the moral qualities of the German people. After the many inflam- 
matory accusations which, by reason of a criminal dictatorship, 
had in past years been poured out against the German people, 
this sign of human understanding of our nation was a real blessing. 

I could not forgo the opportunity of a pilgrimage to Gandhi’s 
shrine, where I laid my wreath among the flowers adorning the 
tomb in the form of a hooked cross. 

Nehru had asked me to arrange some discussions with the 
members of his Five-Year-Plan Committee, of which the draft 
had just been published. On these occasions I was unable to veil 
my criticisms behind mere polite speeches. All these Four-Year- 
Plans, Five-Year-Plans and suchlike have invariably seemed to me 
pretty senseless. In this instance also I could not refrain from de- 
monstrating that the vast programme which had been envisaged 
for a period of five years could never be realized during that time. 
Still less would the means set down on paper suffice to carry it out. 
It would be necessary to count on double and treble the cost as 
well as double and treble the time required. 



532 My First Seventy-Six Years 

Plans of this sort are above all useful for purposes of internal 
propaganda. They are intended to arouse hopes, to postpone 
events, to rely on future prospects for the alleviation of present 
economic anxieties. But they achieve their purpose in an ever 
lessening degree. The public will continue to enquire suspiciously 
how much of these marvellous plans had been carried out. 
Criticism and dissatisfaction will remain on the alert, ready to 
seize every opportunity of expression. It seems to me far better to 
tackle a certain job each year — even if a smaller one — and to see it 
through so that, when completed, one can point to it as an example 
of progress and growth. 

On the return flight from Calcutta to Rome an incident occurred 
that might have developed into tragedy. We wanted to go by 
K.L.M, via Cairo, but all the seats were booked, so we accepted the 
offer to change over to S.A.S. But in so doing we had not noticed 
that we should be flying not via Cairo but via Tel-Aviv. We 
were aware of it only when we landed on Lydda airfield in the early 
hours of the morning. Officially, Israel was still in a state of war 
with Germany. After all the attacks I had experienced on the part 
of Jews in general I should be justified in expecting every kind of 
antipathy to manifest itself in Tel-Aviv. My request that we might 
remain in the ’plane was refused. We were obliged to give up our 
passports and betake ourselves to the waiting-room at the airport. 
My wife was worried to death and unable to swallow a mouthful. 
By contrast I did my utmost to register complete calm. I ate not 
merely my own breakfast but my wife’s also, and endeavoured to 
make my presence as inconspicuous as possible. 

When he came to clear away the Jewish waiter enquired, in 
purest German : 

“Were you satisfied, Herr PrasidentV’ 

I glanced up and replied in the affirmative. After a minute or 
two the waiter returned. 

“Would you please give me your autograph, Herr PrdsidentV’ 

Once again he turned up after a couple of minutes and begged 
an autograph for his colleague. I thought it was time I said a few 
kind words ; 

“Where were you before you came here?” 

“In Frankfurt, Herr Prdsident” 

“Nicer than this, eh?” 

“Oh, Herr Prdsident, if only I could go backl” 

We tried to take refuge on the terrace and then in the big hall. 
Our efforts had the opposite effect. A Jewish lady came up to me 
and introduced herself. It transpired that I had known her uncle 
very well — ^he was an economist in Posen. Her husband and 



Off to the Far East 533 

daughter joined her. To our enquiry: “What are you doing here 
on the airfield?” they replied: 

“We have been here since 1930, but there are no prospects in 
this country. We are flying to Chile.” 

A couple of reporters appeared on the scene. “Will you tell us, 
please, whether Germany will or will not pay?” 

“Gentlemen, Germany has always been prepared to recognize 
her obligations. Give Germany the chance to earn and she will 
pay her debts.” 

My wife urged: “Let’s make sure that we get our passports 
back.” 

We went to the passport counter where they were just handing 
out the passports, and anxiously and expectantly watched the 
procedure. Thank goodness! the last two passports were ours. 
We took them and hastened out to the airfield. 

That same afternoon, when the news of our journey became 
known. Prime Minister Ben Guiion declared in reply to a deputy’s 
reproachful question : 

“Had I known that Dr. Schacht was at the airfield I should 
have had him arrested at once.” 

I was glad to have escaped further imprisonment — ^this time 
in the “Promised Land”. 

Invitations subsequently reached me from various Govern- 
ments which resulted in a second visit to Egypt, and then on 
to Teheran and Syria. In the first half of September 1952, 
Prime Minister Mossadeq invited me to discuss the Persian situa- 
tion. My wife went with me, as well as to Cairo and Damascus 
later on. 

I had not been in Persia since 1937, and was amazed at the 
spectacle presented by the capital with its broad avenues and 
modern palaces — all of them the work of Shah Reza. The achieve- 
ments of this dictator have left their permanent mark on the city 
and on the whole country. 

In Mossadeq I met a statesman of the highest intelligence, 
supremely well versed in the practices of diplomacy, and of iron 
determination. The main topic of our conversation was, of course, 
the petroleum question. I could not but recognize the moral 
claim involved, and upheld by Mossadeq, and even, now I deeply 
deplore that Western diplomacy has not understood how — by 
exercising a certain flexibility — ^to bring about a solution of the 
Persian oil problem. Domination of the Persian oil industry by 
foreign powers is something which the Persian people will 
never again tolerate, no matter what may be Mossadeq’s ultimate 
fate. 



534 Seventy- Six Years 

There is another point, however, which seemed to me even 
more important. In the chain of countries surrounding the 
Communist Russian centre and stretching from Japan to Lisbon, 
Persia occupies a key position which may prove a blessing or a 
curse according to the political turn of events. Neglect of this 
viewpoint will not be compensated for by any conventional maxim 
or economic sacrifice which, in the event of an agreement, would 
not be very great in any case. 

Besides these discussions I renewed my old links with the 
Milli-Bank and came away with increased faith in the future of 
this Near-Eastern economic territory. 

I had met the Shah in 1937, as an eighteen-year-old youth in his 
father’s house. I now paid him a visit, as well as his wife, who is 
distinguished for her beauty and charm. I had the opportunity also 
of a talk with his younger brother Abdul Reza who displayed an 
outstan d i n g knowledge of economic conditions. My wife, mean- 
while, spent a delightful hour with the Queen and her German 
mother. 

My visit to Egypt as guests of the Egyptian Government 
followed in the second half of September. In the meantime the 
Revolution had taken place. At the head of the Government was 
now General Neguib, one of the finest embodiments of political 
knowledge and statesmanship in our topsy-turvy world. My 
wife and I agreed that we had never met any political leader who 
understood so well how to combine political moderation with the 
necessary energetic action. In addition, his personal charm and 
unassuming manner aroused in us a genuine liking for Neguib 
the man. 

While my wife went sightseeing in Cairo I spent many hours 
with El Amari, the Minister of Finance, and his colleagues, in 
discussing economic and financial matters. In addition I contacted 
private business circles, first and foremost the Chamber of 
Commerce and — ^by way of a particularly delightful meeting — ^the 
members of a gathering of academicians, all of whom had studied 
in Germany. 

In December 1952 I accepted an invitation of the Syrian 
Government to visit Damasais. They wanted my professional 
opinion on the proposed draft bill for the founding of a State 
Central Bank, the licence for a Central Bank for S3rria and the 
Lebanon having hitherto been in the hands of a private bank. The 
Government afforded me the opportunity to visit large parts of the 
country. We flew over Palmyra, those mighty ruins of the Graeco- 
Arab era, over the Plain of Ghab to ^eppo, and on another 
occasion to the north-east corner of Syria where the so-called Plain 



535 


OJf to the Far East 

of Jazirah extends beyond the Euphrates. I realized the amazing, 
undreamed-of possibilities which would result for Syrian agri- 
culture if artificial irrigation were introduced into this part of the 
country. Here is one of the vast granaries, hitherto unexploited, 
for the feeding of mankind. 

On Christmas Eve 1953 we were at home again in Munich with 
our children. 



CHAPTER SIXTY-THREE 


Under the Garuda 

T he old Dutch Colonial Empire of Insulinde no longer 
flies the colours of the House of Orange. Eveiywhere we 
are greeted by the Garuda, the Indonesian Eagle of 
Liberty. 

Our visit to Indonesia lasted three months during which we 
grew to love the land and the people. The country is one perpe- 
tually lush green garden in which it is difficult to find a single foot 
of earth without rioting, luxuriant vegetation. In the garden of our 
hotel situated in the modern business quarter of the town, the 
trees were ablaze with red and blue blossom and from our veranda 
we could almost grasp the orchids that grew on them. 

We had been warned against the tropical climate, but there was 
hardly an occasion when we found the heat really oppressive. At 
weekends it took us one and a half hours at most by car to reach 
Bogor (formerly Buitenzorg) in the mountains where the Govern- 
ment maintains a guest-house at Tugu, more than two thousand 
feet up, and where it was often actually cold at night. We were 
not a little surprised tlie first time we went there, when Herr 
Schamberger, the manager of the guest-house, greeted us in 
German. He was a former chief steward of the Norddeutscher 
Lloyd whom President Soekarno of Indonesia had engaged as 
head chef. 

Tugu was half-way along the road to Bandoeng and already in a 
part of the territory where surprise attacks and fights with gangs 
of bandits were frequent. There was still a great deal of insecurity 
in the country, though mainly confined to West Java, and the road 
to Tugu was occasionally patrolled by sentries. But we never 
encountered any unpleasantness. The rural population was always 
friendly; kindliness is, in fact, a characteristic of the whole 
Indonesian people. During our stay we often drove through the 
countryside in Bali, North and South Sumatra, and also in 
Central Java and never met vdth any mishap. In the Bali villages 
the women stiU go naked from the waist upwards, but in the towns 
they usually wore some sort of a loose jacket. We visited several 
plantations in Northern Sumatra where the owners and managers 
all told us that they got on very well with the population. True, 



Under the Gaitida 


537 

they had lost some of their land which had been seized by the 
workers, but on the whole the people were both willing and 
industrious. 

With the exception of one or two ports such as Djakarta and 
Surabaya, the most disturbed part of the country is undoubtedly 
West Java. Nevertheless, I would estimate that in the course of a 
year more people are murdered and beaten up in Chicago than 
in Java. But no one mentions Chicago, whereas every raid that 
takes place in Java is the subject of indignation on the part of the 
international Press. 

What is more important is that the country folk are no longer so 
keen on their job, and agricultural production has declined rather 
than increased. In the towns people are showing a real desire for 
education. The secondary schools are very well attended. In the 
larger villages, too, elementary schools are springing up every- 
where and illiteracy will soon have disappeared from Indonesia. 

There is a veiy strong anti-Dutch feeling in Indonesia. Never- 
theless not a single Dutch estate has been expropriated. Dutch 
plantations and Dutch-owned shipping lines still exercise a strong 
influence, but their importance will gradually diminish. Unfor- 
tunately, the whole problem of foreigners in Indonesia is affected 
by this anti-Dutch feeling. In many instances this hostility to 
foreigners is elevated into a political platform and many Party 
circles thrive on it. 

My wife and I found accommodation in Djakarta’s one and 
only large hotel which, though still under Dutch management, has 
lost much of its glamour as the meeting-place for Europeans in 
Indonesia. The only reminders of past splendour were the rooms, 
but catering and service were no longer up to their former standard. 
We had a bedroom with adjoining shower which did not always 
yield much water, but was sufficient for a cool-down. Next to it 
was a large study and a spacious loggia where we sat out on most 
evenings. 

The Ministry of Finance had allotted me an Indonesian secre- 
tary who, in addition to Dutch and English, spoke excellent 
German. Mrs. Zulia Jahja was a slender, bronze-skinned woman 
of medium height, with four sons, the eldest of whom was twelve 
years old. She was the only woman of her generation to attend the 
secondary school, was highly intelligent, invariably industrious 
and willing and consistently kind and charming. She had kept 
her girlish figure in wonderful condition. My wife was especially 
interested in Mrs, Jahja’s blue-black hair which she wore in 
an enormous knot and which, when loosened, reached to her 
knees. 



538 My First Seventy-Six Years 

The marvellous colours of the sarongs that Mrs. Jahja, like all 
Indonesian women, was accustomed to wear were admirably 
suited to her whole appearance. My wife with her artistic tenden- 
cies fell in love at once with these Indonesian materials, and when- 
ever I could spare time from my work we spent long hours in the 
bazaars in the Old Town. Like every newcomer she allowed her- 
self at first to be fascinated by the colours which, as it seemed to 
me, were just right for the dark-skinned Indonesians but not for 
a fair Northern woman. She very soon tired of these colour blends 
and learned to distinguish and appreciate the genuine designs of 
the different islands and tribes. With Mrs. Jahja’s help she learned 
also how to deal and bargain with the Chinese traders. Her greatest 
success was when she returned one day with some material which 
she had bought for eighteen rupees. 

“Just think of it, the trader asked two hundred rupees to begin 
with. He swore the piece was worth double and he would starve if 
he let it go for one rupee less. But Mrs. Jahja wouldn’t budge and 
in the end he came down to less than a tenth of the price.” 

Mrs. Jahja, who was standing by, remarked: 

“And he still made a profit on it.” 

The Government had asked me to prepare a Report, not, how- 
ever, in the sense of a general survey of existing conditions. What 
they wanted were recommendations and opinions as to the ways 
and means by which existing difficulties and the country’s finan- 
cial and economic problems in general could be overcome. I 
prepared this report which was published by the Government in 
the form of a booklet printed in German and Indonesian and 
presented to every Government official. In it I emphasized very 
frankly and outspokenly what it was that the country lacked, and 
put forward several suggestions which, in my opinion, might be 
useful to so young a State which had still to be moulded into shape. 
The invitation extended to me by the Indonesian Government 
undoubtedly did much to stimulate universal interest in the 
country. For this reason some extracts from my Report dealing 
with the general situation may not be out of place: 

“The difficulties confronting the young Republic of Indonesia 
arise from the fact that, through a sudden upheaval, a nation of 
seventy-five million soxils, with the most widely differing languages, 
customs, ways of life and primitive social conditions, was violently 
wrested from a superimposed, foreign, but nevertheless smoothly 
functioning administration, and left to its own devices. Further, 
these events were influenced by such political catchwords as 
Democracy, Freedom, Self-Govemment, which, even among the 
most highly-developed and educated nations, have acquired a 



Under the Garuda 539 

certain value only when qualified by corresponding limitations, 
but which can prove positively devastating when voiced by a 
completely ignorant, illiterate crowd. The highest praise is due 
to the very small educated native upper class which today bears 
the political responsibility for this heterogeneous mass of people. 
This tiny leading class should not consider it derogatory to their 
colleagues that the latter are inferior to the previous administra- 
tion in knowledge and experience. It is not their fault that they 
are able only now to catch up on this knowledge and experience. 
The blame rests, not on the present Indonesian leading circles, 
but on their former rulers.” 

“The fact that their Republican liberty is such a young growth 
makes it easy to understand why the Indonesian nation today is 
extraordinarily jealous in safeguarding its sovereignty. Never- 
theless the nation should realize that, in pursuing its upward 
path, foreign assistance is entirely compatible with the preserva- 
tion of its sovereign rights— indeed it is indispensable. This applies 
first and foremost to the machinery of government,” 

“Still less is it possible to dispense with foreign co-opera- 
tion in economic matters. All undeveloped countries which have 
adopted European methods and European civilization have fol- 
lowed the same road that Indonesia must now tread, to their highest 
advantage.” 

“Fear of possible misuse of foreign capital to the detriment 
of Indonesian interests has developed into an inferiority complex 
among the Indonesians which is entirely unjustified. The formal 
restrictions imposed on the inflow of foreign capital should be 
done away with at once. It should not be forgotten that, during 
the Colonial period, foreign capital operated under foreign law, 
whereas now foreign capital is subject to Indonesian jurisdiction. 
The one obligation attendant upon these changed conditions is 
that foreign capital shall be dealt with on the same principles as 
native capital, without any discrimination, as happens in the 
leading civilized Western States.” 

“Without the aid of European capital not a single one of the 
extra-European countries has been in a position to develop on 
modern technical lines. Before the First World War — ^i.e. prior to 
1914 — ^the United States of America, which today leads in tech- 
nical civilization, was a country in which between eight and ten 
million gold dollars’ worth of foreign capital was invested. In the 
United States today all former foreign undertakings are in 
American hands. The Argentine Railways were built from begin- 
ning to end with British capital. Today they are in Argentine hands. 
The industry of Rhineland- Westphalia in my own country. 



540 My First Seventy-Six Years 

Germany, was started one hundred years ago, mainly with Belgian 
and British capital. It did not need more than a few decades before 
the Germans had earned enough to buy back all foreign property. 
Indonesia can look forward to just such a possibility. That is why 
she should open her doors wide to admit foreign capital in order 
that Indonesian production, industry and trade may develop as 
rapidly as possible on modern technical lines.” 

“The standard of living among the Indonesian population is 
very low. The demand for the most elementary equipment for 
the household, clothes and trading is enormous. It is true that, 
while the Government can help to meet that demand and raise the 
standard of living, both must really accrue from the labour of the 
people themselves. From all well-informed reports and observa- 
tion the fact emerges that the work accomplished by the popula- 
tion today lags considerably behind that achieved during the 
colonial period. The demand for higher wages on the part of work- 
people, coupled with a decline in output, has resulted in many 
plantations becoming unprofitable. The population must be made 
to realize again and again that undertakings which fail to provide 
a surplus will be compelled to close down and to dismiss staffs. 
Furthermore, the population must realize clearly that there is a 
fundamental connection between wages and output. Where no 
surplus is achieved, no surplus can be distributed. The man who 
produces more must receive a higher remuneration than the 
man who produces less. Liberty is not synonymous with laziness. 
Freedom is not given away : it must be earned daily, in war by force 
of arms, in peace by the work of brain and hand. Whoever desires 
better housing, clothing and food must work for it. That is 
God’s law. But it is also the essential condition of all economic 
progress in a country. If prosperous America is to be regarded 
as a model of democratic freedom we must also regard American 
working output as a model which has achieved this prosperity and 
thereby assured her liberty. The East will attain equality of civiliza- 
tion with the West only when it assimilates those Western virtues 
which have hitherto enabled the West to enjoy its pre-eminent 
position in the world. For this the requirements are self-discipline, 
a sense of responsibility, and willingness to work. The Western 
world is not actuated merely by desire for gain. It has reached its 
present position by taking interest and pleasure in work and in the 
output connected with and resulting from that work. It knows 
that work is linked with a sense of responsibility to the community. 
The idler receives no ‘lucky breaks’; the goo'd worker achieves 
liberty and life, both for himself and for his people.” 

“The idea of a Welfare State as a kind public benefactor under 



Under the Gantda 


S4I 

official leadership is an assumption leading directly to totalitarian 
Communism, and which has nothing whatever in common with 
the sense of responsibility of the individual. When the first English- 
men emigrated to America they found no ready-made houses 
and gardens, no roads, streets or water-supply, no hospitals or 
sports grounds. They had to provide all these for themselves. 
From the wilderness they and ffieir descend an ts created the most 
powerful country in the world without any previously established 
social services, sanitary authorities and suchlike. The State does 
not exist to make its citizens happy — ^that is the citizens’ own job. 
The State exists to protect its citizens. Gifts and acts of charity 
are bad educators: difficulties and hardship are the making of 
men.” 

“It is, of course, essential to get the present railway system into 
working order again and increase its volume of traffic as much as 
possible. Furthermore, traffic policy should not be directed towards 
the extension of the railway system, but rather to the construction 
of big main roads for long-distance traffic. Since the unprecedented 
advance of the automobile, not merely as private transport but 
especially in the transport of goods, it is safe to say that the railway 
era is past. The countries now in process of development have 
this advantage over the old industrial States, that they are able, 
so to speak, to bypass costly railway construction and concentrate 
instead on the building of long-distance roads. Road construction 
and road transport are both cheaper than the railway with its 
complicated service. Apart from the import of some not-too- 
expensivc machinery, road construction can be carried out with 
native material and native labour, whereas everything for the 
railway — from the actual track, including locomotives and 
coaches, to the complicated signalling system — ^has to be imported 
from abroad against payment of expensive foreign exchange. 
There is no need for the Government to worry about providing 
vehicles for road traffic. The provision of goods vans, lorries and 
omnibuses can safely be left to private enterprise, which will 
gladly seize such new business opportunities. The construction of 
new roads is also the ideal basis for new settlements in hitherto 
undeveloped districts,” 

“A young State which is in need of capital for everything is 
consequently always liable to find itself in the danger-zone of 
inflation, because it has to resort to loans from the Central Bank. 
Such a State must, above all, insist on rigid economy in Govern- 
ment spending. It may undertake only the most urgent taslcs and 
must put everytliing aside if the necessary sources of income are 
not functioning. This necessity for economy is in contrast to the 



542 My First Seventy-Six Years 

understandable desire of Parliamentary representatives to meet the 
economic wishes of their electors as far as possible — ^wishes which 
nearly always involve State expenditure. If, for lack of income, a 
Finance Minister is debarred from acceding to these requests, 
the blame will fall primarily on him instead of on the deputies who 
put forward demands which are financially incapable of fulfilment. 
A really good Finance Minister is seldom popular. Not until a 
later date will justice be accorded him. The Government should 
resolve to discuss no items of expenditure in Parliament unless at 
the same time it can indicate how the cost is to be met. There is 
so much talk now all over the world of ‘deficit spending’, so 
much support for this policy of exceeding the budget in order to 
tide over economic needs. But every expense not provided for in 
the budget will have somehow or other to be met out of cash. 
Indonesia does not possess a money market where this could 
be achieved by the issue of short-term treasury bills or similar 
measure. To have recourse to the Central Banlc threatens the stab- 
ility of the national currency. In her financial policy, therefore, 
Indonesia must endeavour in all circumstances to maintain the 
balance between income and expenditure. A small, well-paid 
staff of officials is better than an over-large, badly-paid staff. In 
particular, the remuneration attaching to the highest State appoint- 
ments should be so calculated that their incumbents know them- 
selves to be unhampered by material anxieties and can devote 
themselves entirely to their governmental duties. Payment of the 
remaining staff must also be reckoned in a manner calculated to 
ensure that they are proof against illicit material transactions. 
Every official must realize that he has the honour of his country in 
his keeping.” 

“The people of Indonesia are intelligent, obliging, and, lilte all 
primitive races, possessed of a strong sense of justice. As a result 
of the long period of colonial rule they are lacking in self-control. 
But he who cannot rule himself is in danger of being ruled by 
others. The people of Indonesia are faced with a vital choice: 
whether to choose their rulers from among themselves or once 
again to succumb to foreign influence. There can be no doubt as 
to the answer. But if they wish to elect their own Government 
they must confer sufficient power on that Government to enable it 
to maintain discipline and insist on obedience to its laws. Demo- 
cratic parliaments do not exist for the purpose of discussing every 
tactical Government measure beforehand. They should prescribe 
a certain standard of conduct and, subject to its limitations, should 
leave the Government free to act. They can criticize serious 
mistakes and miscalculations afterwards and even remedy them 



Under the Garuda 543 

when occasion demands. Mistakes and miscalculations can happen 
anywhere, but it is only by our mistakes that we learn anything. 
A Government without full authority to act, cannot act at all. 
Parliaments are not rhetorical training-grounds, but mandators 
fully aware of their responsibility. Wi 5 i all the disorder, the 
insecurity, the insubordination rampant throughout the country, 
Indonesia needs a Government capable of action, with the will, 
the strength, and the power to punish and eliminate every revolt 
against public order with the full weight of its authority.” 

“The Indonesian has no desire to be a member of a colonial 
people. ‘East is East and West is West, and never the twain shall 
meet’ is repugnant to him. He wants equal rights with other 
nations without giving up his individual characteristics. He 
refuses to have a foreign way of life foisted upon him. He appre- 
ciates wealth and possessions and Western comfort, but he values 
also certain things which are not for sale — ^human dignity, a sense 
of honour, national consciousness, good breeding, loyalty to God, 
Only someone who understands this philosophy can be of real 
help to him. He recognizes and respects the fellowship of the 
human race as expressed by Goethe ; 

‘East and West belong to God, 

Northward, Southward, all the lands 
Rest secure within His hands,’ ” 

Personal contact with Ministers and higher ofEcials was always 
on a very friendly and confidential footing, We were particularly 
impressed by the Met deha — ^the official Indonesian State Festival 
which took place on the 17th August in a large field in front of the 
President’s palace, where stands and benches were arranged in a 
huge square. Every seat was taken, and a crowd of several thousand 
stood throughout the proceedings. The high-light of this Festival 
of Liberty was the hoisting of the Flag which was borne by a little 
group of gaily-uniformed girls. They carried it to the President 
who dedicated it, and it was then hoisted at the flagstaff in the 
centre of the square. 

In the evening there was a display of Indonesian national 
dances in the grounds of the President’s palace at which the entire 
Diplomatic Corps and all the higher officials were present, as they 
had been earlier in the day. 

It was a real Indonesian party, wifli dances from the most widely 
different islands. Gamehm — bands played. The dancers— men and 
women — swayed to and fro in the light of torches and candles, 
their fingers describing mysterious figures in the darkness and 



544 Seventy-Six Years 

their arms writhing like serpents. Every movement, every step had 
its own esoteric, mystic significance. At intervals demons appeared 
wearing fierce-looking masks, brandishing swords and endeavour- 
ing to overcome the good spirits. The whole was accompanied by 
the muffled, soft, vibrating sinuous music of the gamelans, the 
complete antithesis to the hard, staccato rhythm of American 
jazz. 

The dancing display was preceded by a march-past of troops 
who had prepared a most deeply-moving surprise for us. We had 
come from a Germany which was in a state of chaos ; we had lived 
for seven years as outlaws in a homeland where all tradition 
appeared to be forcibly destroyed and trodden underfoot. Now, 
suddenly, in distant Asia, there appeared before our very eyes a 
military detachment, led by an Indonesian band as precise and 
assured as only a Prussian military band could have achieved. 
And the airs they played were the old familiar Prussian military 
marches. When they started to beat a tattoo, which we had not 
heard for about fifteen years, flutes, kettledrums, band pieces 
followed one after the other, just as they did in peacetime in any 
German garrison parade-ground. Amid the breathless silence of the 
spectators there rang out the mighty hymn: 7 pray unto the Power 
of Love, ten thousand miles from the countiy from which that 
music originally came. 

After concluding my Report I wanted to complete my impres- 
sions by visiting those parts of the country I had not yet seen. 
We travelled by car and ’plane to Bali where the beauties of scenery 
and people still holds the Western world entranced. We flew 
over the highest volcano in Sumatra, around which om* pilot 
described a full circle because we had a marvellous view, such 
as he had seen only once before in all his five years’ flying on 
Sumatra. We stopped at Padang and Palembang and walked along 
the Bukit-Tinggie Canyon and Lake Toba. 

Wherever I went I found my observations confirmed. Indonesia 
is one of the richest countries in the world. With the exception of 
cotton, for which the climate is too tropical, and wool, for which 
the sheep cannot find the proper pasture, there is scarcely a raw 
material which is not present in this island country and only 
awaits exploitation. What seventy-five million people will make of 
it only the future will reveal. 

Many Western onlookers may be disappointed that the ideals 
of present-day Western democracy are not over-highly esteemed. 
That applies not only to Indonesia but to almost all Mohammedan 
countries. Naturally, among all educated and cultured persons the 



Under the Garuda 


S4S 

excesses and crimes of the Hitler regime continue to incur 
unqualified condemnation. But the social and economic achieve- 
ments of the early years of the Hitler era have met with a most 
interested reception on the part of these peoples. Furthermore, 
they all realize that it is to the Second World War they owe their 
final deliverance from colonial rule. Obviously therefore the Hitler 
regime cannot here be regarded as a hundred per cent, damned. 

It stands to reason that aU the peoples of Southern Asia have 
adopted the parliamentary system of government. That, however, 
does not make them slavish imitators of the West. They fear that 
over- Westernization might lead to a decrease of their hereditary 
culture and religious outlook. It is not so much their political 
interests that differ from those of the West as their anxiety to 
preserve their own characteristic features in cultural, intellectual 
and religious matters. Anyone wishing to work alongside these 
nations must accustom himself to treat them, not as down- 
trodden people according to the old Anglo-Saxon manner, but 
must meet them half-way with a feeling that they are entitled to the 
same rights as other members of the human race. 

While we were bathing with our Indonesian friends in the 
swimming-pool at Tugu one of them let fall a remark that I shall 
not forget: “Three years ago it would have been impossible 
for white and coloured people to have bathed together in this 
swimming-pool.” 

Truly, we have much to atone for. 



CHAPTER SIXTY-FOUR 

Finale 


N ow I am back in Germany once more. On my desk are the 
proof-sheets of these Memoirs. These seventy-six eventful 
years of my life comprise at the same time seventy-six years 
of German history. Of much that is noteworthy I have recounted 
only my own experiences — confused, chequered, contradictory 
enough in all conscience. My own life, with its ups and downs, 
has kept pace with the ups and downs of this historic epoch. 
Unlike so many others I did not seek to escape them. I always felt 
that my roots were those of my people, my destiny boimd up with 
theirs. The easy-going Ubi bme ibi patria was never my line. I 
have never gone here, there, and everywhere in pursuit of a life of 
luxury and pleasure, but have sought to create and promote the 
comforts of life among my own people. 

No matter how deeply I may be rooted in the German people, 
I have never entertained chauvinistic ideas. Nationalism for me 
has invariably meant living and working in a manner that others 
will look up to and imitate. What holds good for the nation holds 
good also — ^in my view — ^for the family. I am convinced that only 
a family man can fully appreciate his responsibility towards the 
whole nation. The family is the germ-cell from which nations are 
born. It is from the family that the civilization and morals of the 
nation develop. 

Twice in my life I have founded a family. Today, my daughter 
by my first marriage is the mother of four children with her own 
cares and responsibilities. It is a long time now since we climbed 
the summit of the Jungfrau together. It is even longer since that 
unhappy nth November 1918, when the signing of the Armistice 
at Compifegne spelled the ruin of Imperial Germany. On that day 
I wrote in my daughter’s birthday-book this verse which expresses 
my fundamental political outlook : 

Neither violence nor power of the purse 
Fashion the universe. 

Ethical action, spiritual force 
. May reshape the world’s course. 



Finale 


547 

Violence I have always loathed. Money I have striven for only 
in so far as its possession has left me free to devote my energies to 
the promotion of the common good. The material wealth I was able 
to save after the breakdown following the First World War was still 
sufficient to enable me to enter public service. The total loss of my 
material possessions after the Second World War compelled me 
once again to resume my professional career. 

My first marriage gave me Jens, my only son, who lost his life 
on the death-march of prisoners to the East in the last days of the 
war. He would have carried on my name. Sans peur et sans 
reproche, with his cleverness, his simplicity and his acquired 
knowledge, he was a lad of great promise. He had no enemies — 
only friends — and knew how to get on with gentle and simple 
alike. He would have become one of those men whom Germany 
especially needs today, an economist of distinction.. When he 
launched out for himself I presented him with my own translation of 
Rudyard Kipling’s poem If which embodied my view of life as well 
as his own. The loss of Jens remains the greatest sorrow of my life. 

My greatest happiness I owe to my second wife, whom I married 
when I was sixty-four years old and who presented me with two 
daughters, our joy and our hope. During those seven years of out- 
lawry, political persecution and menaces the thought of my wife 
and children again and again comforted and encouraged me. 

During those years of persecution, as indeed during my whole 
life, I was able to hold my own. If I had a job to do I got down to 
it, undeterred by favour or jealousy. True, I have made many 
mistalies; there is much that I have failed to understand; but I 
have never gone against my convictions or against my conscience. 

There are two kinds of people for whom I have no use whatever : 
those who shirk their duties and those who are always wise after 
the event. They come under two headings, to which the following 
verses may apply: 

I 

As a holy terror I’m always seen 

By the shirker, the luke-warm, the not-so-keen. 

If they could they’d have eaten me whole, although 

They know 

They couldn’t digest such a tough old bean. 

II 

Oh, how nice it is to know 
(When we’ve played our innings) 

What we really should have done 
Right from the beginning. 



54S My First Seventy-Six Years 

If we would but hearken to 
This or that adviser, 

Always — after the event — 

We’d be much the wiser. 

When confronted with any job, whether or not of my own choos- 
ing, I have tackled it without regard to Party politics, in which I 
have never talcen any pleasure. Where the welfare of my people 
was concerned, no Party politics could keep me from seeing the 
job through. 

Apart from many minor duties, I have been able on three occa- 
sions to take a hand with some success in the moulding of economic 
and social conditions. 

The first was when the Communist peril was averted by once 
again giving the German people a stable currency. This was not 
achieved by the mere theoretical institution of Rentetimark or 
Roggentnark. The decision to do so involved a struggle which 
lasted for months in order to maintain the stability of the Reichs- 
mark, and a credit policy which for years kept the value of the said 
Reichsmark at the same level. 

When at the beginning of the nineteen-thirties unemployment 
figures reached the seven million limit, the question again was 
how to cut the ground from under the feet of Communism. The 
introduction of common-sense, if daring, methods of finance 
enabled us to provide work for all the unemployed in a little under 
three years without endangering the currency. The country’s 
financial position improved visibly each year. 

The third success was the restoration of the balance of trade 
through the introduction of bilateral and offset agreements with 
those countries whose economy was complementary to the 
German; and by abandoning the hitherto prevailing multilateral 
“most-favoured-nation” policy which had operated solely in the 
interests of those countries enjoying a strong economic position. 

On all three occasions I was able to break new ground. I 
abandoned the Central Banks’ so-called classic discount policy. 
I embarked on a programme of productivity expansion not de- 
pendent on savings (i.e. on a restriction of capital expenditure) 
but on the actual creation of new money. I rejected the trading 
methods which classic British economic theories had bequeathed 
to us. 

These successes, however, were overshadowed by the tragedy of 
historical events. My monetary policy was undermined by the 
reckless piling-up of debts on the part of the Weimar Govern- 
ments and by the extortionate reparations imposed by our enemies. 



Finale 549 

My plans for creating employment and improving trade were set 
at naught by Hitler’s war mania. 

I was still able to do my bit in achieving the cancellation of 
reparations ; but my efforts to prevent the outbreak of war were 
frustrated. The man under whom I succeeded in eliminating 
unemployment and adjusting the balance of payments, ruined 
everything later on by his war policy. My critics seized on this as 
an excuse for stigmatizing my early work under Hitler as a crime. 
Well, let them! On this question history will pronounce judg- 
ment. Histoi'y vnll also ask what my critics did to avert the disaster. 

My readers may perhaps want to know what I thinlc of Ger- 
many’s future. I am full of confidence. The whole world is amazed 
at the way in which, after the cruellest ordeals, the German nation 
arises swiftly and purposefully from the ruins and proceeds to 
re-establish order and prosperity. 

The reason for this “miracle” is to be found in the German 
people’s love of work, of civilization, of their fellow-men, their 
love of orderly and peaceful development. From this attitude I 
have again and again derived comfort and hope. The life of an 
individual is a patchwork, as mine has been. The life of a nation 
has often been described as eternal. It will be so only when the 
nation remains true to itself, as I have tried to do throughout my 
long life. 




INDEX 


Addisi Sir Charles, 316, 353 
Alexandrov, Major-General, 490-3, 498 
Andresen, Hanna, 517-19 
Andrus, Colonel, 450-1, 507 ) 53 ° 

Aosta, Duchess of, 397 
Atatllik, Kemal, 331-3 
Auriol, Vincent, 380 

Bachmutm, Professor, zi6 
Ballin, Albert, 46, 143 , 159 
B.I.S. (Bank for International Settlements), 350- 
353, 359-60, 2S9, 388 
Bank of England, 191, 194 , 196 - 9 , 201-2 
Banque de France, 308 
Barthou, L6on, 208-ta, 245 
Bearsted, Lord, 384 
Beck, General, 389, 478 
Belnhom, Bile, 403 
Bemsdorf, Albrecht, 425 
Bemstorff, Count Andreas, 31 
Berthelot, Philippe, 245 
Bethusy-Huc, Count, 151 
Btsmarck, Gottfried von, 421 
Bismarck, Prince Otto von, 4-5, 40, 59-60, 90, 
93, 138-30 

Elomberg, Field-Marshal von, 338-9, 363, 369- 
370, 386-7, 470 
Blum, Lion, 380, 439 
Bohlen, Ktupp von, 301, 434 , 457 
Bonh&fer, Dietrich, 436 
Bormonu, Mardn, 430, 48a, 497 
Biauehitsch, General von, 388, 406 
Brauer, Max, 319 
Breltscheld, jkudolf, 96 
Brentano, Lujo, 68 
Brockdocf-Ahltfeld, General, 389 
Bruins, Professor, ai6 

Brilnlng, Chancellor, 181, 319, 377-8, 280-1, 
285, 387-8, 293-4, 303, 434. 46s 
Buchanan, Sir George, 130 
Bilcher, Profeaaor Karl, 68 
Buff, Charlotte, 30 

Canaria, Admiial, 406, 431-4, 433 
Caprivl, General von, 92-3 
Caruso, Enrico, 108 
Chamberlain, Neville, 389 
Clapdiua, Matthias, 34 
Qasr, General, gio, 533 
Climenceau, Georges, 79-80 
Ctipps, Sir StBffbrd, 329 

Danat Batik, 78, 99, 172-4, 177 , 283-8 
Darrf, Walter, 313, 338 

Dawes Plan, 176, 178, 195-6, 205, 207-9, 2r3, 
315-17. 219, 331, 233 . 235-6, 238, 343, 24a. 
356, 359-60, 372, 314 
DelhrOcfc, Professor Hans, 93, 357 
DhsoIt, l^ofessor, 75-6 


Deutsche Bank, 96, 99, 102, 137, 141-3, 145, 
244, 278 

Dietze, Professor von, 345 
Dbt, Arthur, 68 

Dix, Dr. Julius, 459 , 462, 46S-7, 469-71, 473-6, 
478-9. 494 - 5 .' 497 - 9 . S08 
Dbnitz, Admiral, 407, 434 , 4S6, 469 
Dresdner Bank, 97-100, 102-5, 107-11, 118-19, 
127, 129, 137 , 139-41, 144-S, 288 
Dicyfusa, Willy, 136 

Bbcrt, President, 5, 150. 157-8. i8o, 189-90, 22S 
Bggets, Christum von, 20-2, 32, 1 16 
Bggets, Friedrich von, 32 
Eggers, Hjalmar von, 65-6 
Bulcnburg, Count Friedrich, 267 

Falk, Norbert, 72-3 

Falkenhausen, General von, 435, 435-6, 439 

Fedcr, Gottfried, 283, 295 , 304 -S. 325 , 359 . SI 3 

Flora, Professor, 207 

Fontane, Theodor, 265-6 

Frederick III, Emperor, 5 , 40-3 

Frltsch, General von, 386-8, 391, 469-70 

Frltzaclic, Hans, 454, 457, 506 

Fromm, General, 433 

Funk, Walter, 340-1, 377 , 4t)0, 411, 455-6 

Pilratcnberg, Hans, 136 

Filrstcnberg, Karl, 99-100, 106, 110, 184 

Oalen, Eisliop von, 360 

GDP (German Democratic Party), 148-54, 18a, 
188, Z31, 236, 356 
Goiter, Professor, 525 
Georgs V, King, 312 
Geiicke, Pastor, 452, 456 
Gcrlsch, Hello von, 96, 112-13 
Gilbert, Parker, 216, 233, 235, 238-9 
Gocbbcls, Dr„ 279, 301, 321, 329, 33s, 345, 350, 
383, 418, 467, 470 

Gocrdclcr, Dr., 421-2, 429 - 30 , 433 - 5 , 440, 478 
Gocrlng, Herbert, 421, 433 
Goeiing, Hermann, 278-9, 2B2, 300-1, 321, 
335 - 6 , 367-72, 374 - 7 , 387 , 406 , 408-9, 418, 
430, 446. 455-6, 468-9, 477 , 4*2, 48S-7, S24 
Oolddiskontbank, i8t, 196-7, 201-6, 208, 289, 
316 

Goldschmidt, Jakob, 171-3 
Goto Pasha, Field-Matshsl General Colmar 
yon dcr, 132-3, 135, 138, 290 
Greeley, Horace, 14-15 
Gronau, Genetal, 422, 431-2, 47S 
Grcth, Klaus, 24 

Gutmonn, Eugen, 99, 102-3, 108, no, 139-40 
Gutmann, Heibecc, 139 

Hahn, Viktor, 72 

Haider, Genet^ I20, 389, 425, 437, 439, 445 
Harms, Professor Bernhard, 235-6 



INDEX 


551 


Hasbach, Wllhelmj 8i-z, 8s, 235 
Heath, Donald, 410, 447-8 
Kebbel, Friedrich, S 3 “ 5 , 67 
Hdfferich, Kail, 17B, iBO, 188-9, 204-3 
Helldorf, Count, 386, 421 
Henderson, Sir Neville, 493, 498 
Heea. Rudolf, 339 - 41 , 4 i 6 , 453-6 
Heuss, Theodor, 112 

Himmler, Heinrich, 321, 323, 3 * 7 , 346 , 349 , 386, 
472, 482, 497 

Hindenbure, President von, 149, 260-1, 263, 
288, 296, 29S-300, 326, 496, S22 
Hitler, Adolf, 2, 6, 96, lao, 177, i8a, 222, 272, 
279-82, 290, 293-306, 309, 3T2, 319-28, 330, 
335 - 8 , 340, 343 , 345 - 8 , 330-4, 358 - 9 , 362-6, 
368-70, 373 - 7 , 379 - 81 , 383-4, 386 - 93 , 395 , 
399, 406-14, 4t6— 23, 430, 434 , 443 , 445 , 
454-6, 464-5, 468-73, 476-80, 482-90, 492- 
494 , 496-500, 522 - 3 , 525, 549 
Hoffmann, Heinrich, 337-8 
Hohenlohe-Chringen, Prince, 141 
Hoover, President, 276-7 
HOppner, General, 478 
Hull, Cordell, 308-10 

Jackson, Chief Prosecutor, 466-7, 471, 473-6. 

479-90, 493-4, 502, 5ti 
Jilkh, Ernest, 116, 124 
Jakobs, Monti, 68 
Jodi, General, 407 , 456 
Jung, Edgar, 331 

Klep, Otto. 273, 276 

iGnderslcy, Sir Robert, 215 

Klose, Margaretc, 225 

Kluge, General, 478 

Koch, Erich, 344, 349 

Kraus, Professor, 459, 324 

Kiosigfc, Count Schwerin von, 294, 319 

Kuhn, Fbilalcthes, I17 

Knng, H. H., 308-9 

Lamont, Thotnaa, 109 
Latetner, Dr. Hans, 490 
Dawrence, Sir Geoffrey, 485 
Leopold, King of the Belgians, 381-3 
Ley, Robert, 343, 345 , 437 
Licbknecht, Karl, 137-8 
Lindemann, General, 422-3, 426-7, 431-2, 440 , 
478 

Linlithgow, Earl of, 402 
Liat, Friedrich, 379 
Ldbe, Paul, 323 
Lochner, Louis, 234 - 5 , 5o6 
lainun. Major von, 131-3, 136-7, 139 , 189, 223 
Luther, Dr. Hana, 179-80, 203, 2S8-9, 302-3, 
309-10 

Lutae, Victor, 320, 416 

Macdonald, Romaay, 307 
Adaler, Rdnhold, 308, 320, 322, 325 


Mathias, Erich, 296 

Max of Baden, Prince, 149 

Meissner, Otto, 260, 288, 296, 323-6 

Mcndelasohn-Bardioldy, Ernst von, 136 

Mesaersmith, George, 466-7 

Milch, Field-Marshal, 407 

Mtihlen, Norhert, 36 

MliUer, Hermann, 357 

MlUler, Dr. Joacgdi, 421, 433 , 525 

MtUler, Waldemar, 97-8 

Munk, Kaj, 330 

Mumane, George, 273 

Mussolini, Benito, 37S, 397, 312 

Myron, Patriarch, 268-p 

Mysore, Maharajah of, 404-S 

Nathan, Henry, loo-i 
Nathan, Dr. Foul, 151 

Natlonalbankttlr Deutschland, 99. 140-2, 171-2 
Noumann, Friedrich, 1 12-13 
Neguib, General, is, 334 
NeuhHualer, Bishop, 271, 439 
Neurath, Baron von, 312. 381, 3S6, 454 , 470 
NiemBllcr, Pastor, 339, 439 
Normsn, Montagu, 191, 194-203, 206, 234, 380, 
389 

Ostcr, General, 406, 436, 44 ° 

Outmon, Gaston, SOS 
Owens, Jesse, 330 

Facelli, Eugene, 226, 271, 360-1 
Fapen, Fritz von, 280, 294, 296, 320, 322-3, 350, ' 
455 - 6 , 482, S06 
Pechstein, Max, 83 
Pius XII, res Pacelli 
Potthof, Heinz, 96 
Preuss, Hugo, 133 

Raeder, Admiral, 388, 454 , 456 , 469 
Ratbenau, Bmll, 96-7 
Rathenau, Walther, 96, 130, 133, 243 
Rauchelscn, Michael, 225 
RauBclter, XJlricb, 133-6 
Reichsbanfc, i, 4-6, 10, 16, 98-9, 144 , 166, 178- 
180, 183-93, 196, 199, 201-2, 204-6, 208, 
213-25, 228-34, 236-8, 241, 244, 248. 233, 
238-61, 263-5, *67, 273, 384 - 9 , 291, 293, 293 , 
302-4. 308, 3U-ao. 324, 326 “ 7 , 330.350, 352, 
363-7, 369, 377 , 384, 386-7, 391-3, 400, 414, 
436, 460, 463, 468, 475 - 7 , 489, 49 »- 3 , SOO, 316 
Reuter, Dr. Franz, 36, 431 
Reynolds, Jackson, 351-4 
Reza Shah of Persia, 334-4, 533 
KIbbentrop, Joachim von, 332 , 395 - 6 , 406-9, 
41 1, 416, 433 , 469, 482 
Rbcbllng, Hermann, 344 

Rehrbaclj, Paul, 112-3, 116-7, 124, 281 
Roosevelt, Franklin Delano, 108, 307-11, 475 
Rooseveli^ Theodore, 108 



5S3 


INDEX 


Rjjpke, Processor Wilhelms 284 
Roscnbergj Alfred^ 4xo*-zi) 456 
Roficnbergs Arthur^ 296, 358 
Rothermcrci Lord) 498 
Rbwer, Karl, 282-3, 29S 
Rudenko, General, 47S 

Sachs, Camille, 507 
Samoff, David, 3ii-‘i2 

Schacht, Constanze, 11-15, 19-20, 22-3, 25-35, 
48, 61-2, 87 

Schacht, Eddy, 14, 28-30, 32-3, 36-7, 39, 41, 
48, 53, 62-3, 65-6, 1 17, 119, 138 
Schacht, Helnilch, 2, 17-19, 28-9, 51-5 
Schacht, Inge, 5, 7, z 18, 121, zdo, 177, 200, 225, 
231, 259, 266, 268, 423, 448, 546 
Schacht, Jens, s, 7, 119, 121, ido, 177, 272, 294, 
422, 431-2, 547 

Scliacht, Luise, 5, 77, 80, 118-20, i39-4<3, zSa, 
190, 219, 225-6, 230, 238, 247, 272, 274, 290, 
292 

Schacht, Mand, l, 2 , d-7, 335, 413-4, 423, 426, 
429, 431, 435, 447-8, 457, 459, 502-7, 516-17, 
520, 536-34, 537, 547 
Schacht, Oluf, 28, 33, 48, 63, 119-20, x6o 
Schaclit, Sven, 120 

Schacht, WilUom, 2, 10-iz, 13-16, 19, 22-33, 
37-8, 41, 46-8, 61-3, 69, 87, 114, 116, iz8, 
128, 262 

Schacht] WllHem (Junior), 63, x6o 
Scherpenberg, Dr. Hllger von, tai, 259 
Scherpenbeig, Norman Hjalmar von, 200 
SchffT, Victor, 296 
Schlddici, General, 297, 321-2 
Schmidt, Paul, 237 

Schmitt, Kurt, 3x1-12, 318-19, 325, 343 
Schmoller, Gustav von, 90-4 
Schoppe, Amalie, 54 
SchrOdcr, Boron Bruno, 2x7, 286 
Sdxubezt, Professor Hermann, 38-9 
Schurz, Carl, 15 
Schussnig, Dr., 437, 439-40 
Schuster, Hens, 108-9 
Sdiwabach, Paul von, 136 
Schwamberger, Dr., i, 521^ 

Seekt, General von, 211 
Siemens, George von, 96-9, 102 
Siemens, Karl Friedrich von, 140 
Sixtus, Father, 456 
Smith, Al, 310 
Smith, Allan, 174 


Speer, Albert, 374» 446, 449. 4S5. 457. 476. 478 

Speyer, James, 468 

Stamp, Sir Josiah, 246 

Stapelheld, Franz, 283 

StefTeck, FrMuldn, 182-3, 187, 194, 202 

Stdger, Baron von, xo8 

Stettenheim, Julius, 72 

Stinnea, Hugo, 145, 202 

Stolper, Gustav, 292 

Storm, Theodor, 27 

StrQsser, Gregor, 321 

Strclcher, Julius, 455-6, 524 

Stresemann, Herr, 137-8, 150, 177-9, 181-3. 

189, 198, 242 
Strong, Henry, 263-4 

StrOnck, Coptain, 421, 430, 433, 437, 4<|0, 47R 

Taylor, Melvin, 251-4, 272 

Teutach, Bishop, 270-1 

Thomas, General, 406, 433, 437, 439. 44S 

Thyssen, August, 109, 144-6 

Thyasen, Fritz, 279. 301, 335. 439> 445. 447 

Truman, Harry S., 250 

Ullsteln, Dr. Franz, 68, 104 
Ullstcin, Louis, 103-4 
Urbig, Franz, loo-i 

Vermchren, Isa, 425, 442 
Vogelstcin, Dr. Theodor, 151 

Wagner, Adolf. 356 
Wagner, Josef, 436 
Worllmont, General, 450 
Welles, Sumner, 40^10 
Wclsbach, Auer von, 30 
Wieding, Julius, 43-4, 57"9. 67. I3D 
Wilhelm 1. 5> 40-2 

Wilhelm II. 5. 42. 44-5. 59. 66. 123. 148-9 
Winterton, Bari, 384 

Witzleben, General von. 120, 389, 4Zi. 468, 478 
Wolff, Theodor, 151-2 
WOrmann, Adolf, 96 
Wurm, Bishop, 4, 271 

Young, Owen, 207, 2x6, 235, 237, 241-2, 248- 
250, 3II 

Young Plan, 235-43. 245-8, 350-2, 356-7. 259- 
262, 272, 277. 288-9. 3XZ, 315 

Zeppelin, Count, 124 
Zhukov, General, 503